EXHIBIT 13




                          INGERSOLL-RAND
                               1997
                           ANNUAL REPORT
                                 TO
                            SHAREHOLDERS







                                                                             
                                                                   

                     Ingersoll-Rand Company
              Management's Discussion and Analysis


1997 Compared to 1996


The company reported a fourth consecutive year of record sales and
earnings for 1997.  These financial achievements were the result of
a strong domestic economy, moderate economic growth in selected
international markets, a realignment of the company's business
portfolio and the continued success of the company's asset-
management, strategic-sourcing and productivity-improvement
programs.

     Sales for 1997 totalled $7.1 billion, which generated $760.3
million of operating income and $380.5 million of net earnings
($2.33 basic earnings per share).

     The company's results for 1997 reflect a more impressive
increase over 1996, considering the following noncomparable items:

o On October 31, 1997, the company completed its acquisition of
  Thermo King Corporation (Thermo King) from Westinghouse Electric
  Corporation.  For the last two months of the year, Thermo King
  generated $176.9 million of sales and produced an operating loss
  of approximately $0.2 million, after goodwill amortization and
  the effect of estimated purchase accounting adjustments.  Thermo
  King's net loss for the two months ended December 31, 1997, was
  approximately $11.3 million (seven cents per share) after the
  allocation of acquisition interest expense of approximately
  $27.3 million.

o At the beginning of April 1997, the company completed its
  acquisition of Newman Tonks Group PLC (Newman Tonks).  Since its
  acquisition, Newman Tonks has generated approximately $230
  million of sales, and produced approximately $15 million of
  operating income, after the effect of goodwill amortization,
  estimated purchase accounting adjustments and synergistic
  benefits from group operations.  Newman Tonks essentially
  operated at the break-even level for 1997 after considering the
  allocation of approximately $17.0 million of acquisition
  interest expense and its related tax benefit.

o Dresser-Rand Company (Dresser-Rand) is a partnership which
  manufactures reciprocating compressor and turbomachinery
  products, in which the company owns a 49-percent interest.  The
  company accounts for its interest in Dresser-Rand under the
  equity accounting method in which the company only records its
  related ownership interest in the results of Dresser-Rand.
  During the fourth quarter of 1997, Dresser-Rand recorded a $36
  million restructuring charge to reduce its headcount and to
  close underperforming operations.  This charge reduced the
  company's pretax earnings by $13.9 million and its after-tax
  results by $11.6 million (seven cents per share).  Prior to the
  restructuring charge, Dresser-Rand generated approximately $47.5
  million of net earnings (after-tax costs for international
  subsidiaries) for 1997.

o Ingersoll-Dresser Pump Company (IDP) is a joint venture, in
  which the company owns a 51-percent interest and, therefore, it
  is consolidated into the company's financial statements.  During
  the fourth quarter of 1997, IDP recorded a $24 million charge to
  operating income for costs to close and consolidate
  underperforming operations.  The effect of the restructure
  charge, after taxes and minority interest, was $8.1 million
  (five cents per share).

After considering the items listed above, adjusted 1997 net sales,
operating income and net earnings were approximately $6.7 billion,
$770 million and $412 million ($2.52 basic earnings per share),
respectively.

The company reported sales of $6.7 billion in 1996, which generated
$683.5 million of operating income and $358.0 million of net
earnings ($2.22 basic earnings per share).  The company's 1996
results also included the following noncomparable items:

o During 1996, the company sold the Process Systems Group in two
  transactions, which generated a combined pretax gain of $55.0
  million and benefitted net earnings by $34.7 million (21 cents
  per share.

o Other noncomparable items in 1996, which caused a net reduction
  to the company's operating income, were a $37 million
  restructure charge (principally for European operations) and a
  $5.4 million charge for the closure of a foundry at IDP.  These
  charges were reduced by a gain on the sale of an investment
  during last year's first quarter of $4.8 million, which was
  recorded as other income.  The after-tax effect of these items
  reduced net earnings by $22.5 million (14 cents per share).

After considering the effect of these items, adjusted 1996 net
sales, operating income and net earnings were $6.7 billion, $670.9
million and $345.8 million ($2.15 basic earnings per share),
respectively.

  A comparison of key financial data between 1997 and 1996 follows:

o Net sales in 1997 established a record at $7.1 billion,
  reflecting a six-percent improvement over 1996's total of $6.7
  billion.  Excluding noncomparable units from both years,
  adjusted sales for 1997 increased by a comparable percent over
  1996's adjusted total.

o Cost of goods sold in 1997 was 74.1 percent of sales, compared
  to 75.0 percent in 1996.  Partial liquidations of LIFO (last-in,
  first-out) inventory lowered 1997 costs by $4.1 million as
  compared to a $4.8 million liquidation in 1996.  Excluding the
  effects of the LIFO liquidations, the 1997 cost of goods sold
  relationship to sales would have been 74.2 percent versus 75.1
  percent for 1996.  Excluding noncomparable items from both
  years, the adjusted ratio of cost of goods sold to sales
  reflected a marked improvement in 1997, compared to 1996.

o Administrative, selling and service engineering expenses were
  15.2 percent of sales in 1997, compared to 14.8 percent for
  1996.  This increase is primarily attributable to the inclusion
  of Newman Tonks, which traditionally had a ratio of selling and
  administrative expenses to sales higher than the company's
  historical lines and the divestment of Clark-Hurth, which had a
  lower ratio than that of the overall company.

o Operating income for the year totalled $760.3 million, an
  11.2-percent increase over 1996 operating income of $683.5
  million.  The ratio of operating income to sales in 1997 was
  10.7 percent, as compared to 10.2 percent for the prior year.
  After excluding the noncomparable items (previously
  discussed) from both years, adjusted 1997 operating income
  reflects a significant improvement over the adjusted 1996
  results.  This improvement was the combined effect of the
  company's aggressive productivity-improvement and procurement
  programs and the continued stability of domestic markets.

o Interest expense for the year totalled $136.6 million versus
  $119.9 million for 1996.  Interest expense associated with the
  debt incurred for the Thermo King acquisition totalled
  approximately $27.3 million.

o Other income (expense), net, is essentially the sum of foreign
  exchange activities, equity interests in partially-owned equity
  companies and other miscellaneous income and expense items.  In
  1997, these activities resulted in a net expense of $2.1
  million, an unfavorable change of $2.7 million compared to
  1996's net other income of $0.6 million.  This change was caused
  by lower foreign exchange losses of approximately $4.6 million
  in 1997, the absence of the 1996 gain of $4.8 million from the
  sale of an investment and higher net miscellaneous expense items
  of approximately $2.5 million.

o The company's interest in Dresser-Rand's results for 1997 was
  $9.4 million after the effect of restructuring charges
  (discussed previously) versus $23.0 million in 1996.

o The company's charges for minority interests totalled $17.3
  million in 1997 versus $18.9 million in 1996.  These charges
  represent the interests of minority owners (less than 50
  percent) in a consolidated unit of the company.  The largest
  minority interest relates to IDP, which represents $13.7 million
  of the 1997 balance, compared to $17.3 million in 1996.  IDP's
  change is due to the 1997 pretax restructuring charge of $24
  million (discussed previously).  The remaining charges represent
  minority interests in the company's operations principally
  located in India and China.

o The company's effective tax rate for 1997 was 38.0 percent,
  which represents a slight increase over the 37.0 percent
  reported for the prior year.  The variance from the 35.0 percent
  statutory rate primarily was due to the higher tax rates
  associated with foreign earnings, the effect of state and local
  taxes, the nondeductibility of a portion of the goodwill
  associated with acquisitions and favorable tax benefits
  associated with the Thermo King acquisition.

     At December 31, 1997, employment totalled 46,567.  This
represents a net increase of 4,693 employees over last year's level
of 41,874. This increase principally results from 1997 acquisition
activity, partially offset by a reduction resulting from the Clark-
Hurth disposition.

Outlook
The company's outlook for 1998 is for steady improvement in
operating results based on continued stability in domestic markets
and strengthening in selected international markets.  The company
does not believe that the recent financial turmoil in the Asian
markets will have a material effect on the company's 1998
prospects.  These expectations will be supported by aggressive
asset-management, strategic-sourcing and productivity-improvement
programs.

Liquidity and Capital Resources
The most significant event affecting the company's liquidity during
1997 was the acquisition of Thermo King on October 31, 1997.  The
total purchase price paid for Thermo King was approximately $2.56
billion in cash, which was financed mainly by the issuance of both
long-term and short-term debt.  The effects of this transaction are
discussed throughout this report, including in Note 2 to the
Consolidated Financial Statements.

     The following table contains several key measures which the
company's management uses to gauge the company's financial
performance:

                                        1997      1996      1995
Working capital (in millions)           $217    $1,245    $1,016
Current ratio                            1.1       2.0       1.8
Debt-to-total capital ratio               58%       37%       42%
Average working capital
  to net sales                          10.3%     16.9%     17.3%
Average days outstanding
  in receivables                        54.5      56.1      63.1
Average months' supply
  of inventory                           2.5       3.0       3.3

  The company maintains significant operations in foreign
countries; therefore, the movement of the U.S. dollar against
foreign currencies has an impact on the company's financial
position.  Generally, the functional currency of the company's
foreign subsidiaries is their local currency, the currency in which
they transact their business.  The company manages exposure to
changes in foreign currency exchange rates through its normal
operating and financing activities, as well as through the use of
forward exchange contracts.  The company attempts, through its
hedging activities, to mitigate the impact on income of changes in
foreign exchange rates.  Additionally, the company maintains
operations in countries where the company transacts business in
U.S. dollars.  The functional currency of these operations is the
U.S. dollar.  (Additional information on the company's use of
financial instruments can be found in Note 8 to the Consolidated
Financial Statements.)

  The following points highlight the financial results and
financial condition of the company's operations, with the impact of
currency variations where appropriate:

o Cash and cash equivalents totalled $104.9 million at December
  31, 1997, a $79.2 million reduction from the prior year-end
  balance of $184.1 million.  These funds were used to reduce a
  portion of the company's outstanding short-term debt incurred in
  connection with the Thermo King acquisition.  In evaluating the
  net change in cash and cash equivalents, cash flows from
  operating, investing and financing activities, and the effect of
  exchange rate changes should be considered.  Cash flows from
  operating activities provided $703.5 million, investing
  activities used $2.7 billion and financing activities provided
  approximately $2.0 billion.  Exchange rate changes during 1997
  increased cash and cash equivalents by $1.6 million.

o Marketable securities totalled $6.9 million at the end of 1997,
  $1.1 million below the balance at December 31, 1996.  The net
  reduction was due mainly to exchange rate changes.

o Receivables totalled $1,281.5 million at December 31, 1997,
  compared to $1,066.2 million at the prior year end, a net
  increase of $215.3 million.  The increase is attributable to the
  acquisitions of Thermo King and Newman Tonks, which added
  approximately $228.2 million.  This increase was partially
  offset by currency translation, dispositions and
  reclassifications to assets held for sale, which caused net
  reductions of $34.5 million.  The timing of the company's strong
  fourth quarter sales also increased the year-end receivables
  balance.  The company focuses on decreasing its receivable base
  through its asset-management program, which produced a reduction
  in the average days outstanding in receivables to 54.5 days from
  the 1996 level of 56.1 days.

o Inventories amounted to $854.8 million at December 31, 1997, an
  increase of $79.7 million from last year's level of $775.1
  million.  The acquisitions of Thermo King and Newman Tonks
  accounted for increases of approximately $185.6 million, while
  dispositions, reclassifications to assets held for sale and the
  effects of currency fluctuations reduced inventories by $57.2
  million.  The company's emphasis on inventory control was
  demonstrated by the reduction of the average months' supply of
  inventory to 2.5 months at December 31, 1997, compared to 3.0
  months at the prior year end.

o Prepaid expenses totalled $89.5 million at the end of the year,
  $15.4 million higher than the balance at December 31, 1996.
  Foreign exchange activity had a minimal effect on this account,
  while acquisitions accounted for $14.2 million of the increase.

o Assets held for sale totalled $46.5 million at December 31,
  1997, and principally represents the net book value of selected
  operations from the Newman Tonks acquisition that did not meet
  the company's long-term objectives.  In addition, the account
  includes certain European assets of the Construction and Mining
  Group.  The balance at December 31, 1996, comprised the net
  assets of Clark-Hurth, which were sold on February 14, 1997.

o Deferred income taxes (current) of $160.8 million at December
  31, 1997, represented the deferred tax benefit of the difference
  between the book and tax values of various current assets and
  liabilities. The components of the balance are included in Note
  14 to the Consolidated Financial Statements.

o The investment in Dresser-Rand totalled $115.0 million at
  December 31, 1997.  This represented a net decrease of $37.6
  million from the prior year balance of $152.6 million.  The
  components of the change for 1997 consisted of income for the
  current year of $9.4 million, a $42.9 million change in the
  company's advance account and a $4.1 million reduction due to
  foreign currency movements.

o Investments in partially-owned equity companies at December 31,
  1997, totalled $213.0 million, $10.6 million below the 1996
  balance of $223.6 million.  Income and dividends from
  investments in partially-owned equity companies were $19.2
  million and $8.7 million, respectively.  Amounts due from these
  units decreased from $18.3 million to $13.5 million at December
  31, 1997.  Currency movements were the primary cause of the
  remaining $16.3 million reduction.

o Net property, plant and equipment increased by $137.8 million in
  1997 to a year-end balance of $1,283.2 million.  Fixed assets
  from acquisitions added $186.6 million.  Capital expenditures in
  1997 totalled $186.0 million.  Business dispositions and
  reclassifications to assets held for sale reduced the balance by
  $20.9 million.  In addition, foreign exchange fluctuations
  decreased net fixed assets by approximately $24.5 million.  The
  remaining net decrease was the result of depreciation, and sales
  and retirements.

o Intangible assets, net, totalled $3,833.0 million at December
  31, 1997, as compared to $1,178.0 million at December 31, 1996,
  for a net increase of approximately $2.7 billion.  Goodwill from
  the Thermo King and Newman Tonks acquisitions, net of
  amortization expense of $54.7 million during 1997 accounted for
  the change.

o Deferred income taxes (noncurrent) totalled $214.9 million at
  December 31, 1997, which was $52.3 million higher than the 1996
  balance.  The components comprising the balance at December 31,
  1997, can be found in Note 14 to the Consolidated Financial
  Statements.

o Other assets totalled $211.6 million at year end, a decrease of
  $12.2 million from the December 31, 1996, balance of $223.8
  million.  Other assets decreased by approximately $20 million
  due to prepaid pensions, an amount that was partially offset by
  increases due to acquisitions.  Foreign exchange activity in
  1997 had a minimal effect on the account balance during the
  year.

o Accounts payable and accruals totalled $1,370.5 million at
  December 31, 1997, an increase of $275.1 million from last
  year's balance of $1,095.4 million.  Acquisition activity during
  1997 accounted for $259.4 million of the increase, while
  dispositions and currency fluctuations decreased accounts
  payable and accruals by $36.3 million.  Additionally, accruals
  increased by $17 million due to IDP's restructure charge.

o Loans payable were $925.1 million at the end of 1997, which
  reflects a $762.8 million increase over the $162.3 million at
  December 31, 1996.  Short-term debt assumed from companies
  acquired during 1997 added $69.4 million and current maturities
  of long-term debt increased the balance by an additional $145.4
  million.  The effects of translation, dispositions and
  reclassifications to assets held for sale caused a $4.4 million
  reduction.  The remaining increase is primarily due to higher
  short-term borrowings to finance Thermo King and other
  acquisitions.

o Long-term debt, excluding current maturities, totalled $2,528.0
  million, an increase of approximately $1.4 billion over the
  prior year's balance of $1,163.8 million.  Proceeds from the
  issuance of long-term debt of $1,508.6 million were primarily
  used for the Thermo King acquisition.  Reductions to long-term
  debt of $145.4 million represent the reclassification of the
  current maturities of long-term debt to loans payable.  Foreign
  exchange activity had a minimal effect on the account balance
  during the year.

o Postemployment liabilities at December 31, 1997, totalled $937.1
  million, an increase of $122.4 million from the December 31,
  1996, balance.  Postemployment liabilities include medical and
  life insurance postretirement benefits, long-term pension and
  other noncurrent postemployment accruals.  The increase in the
  liability during 1997 is almost exclusively related to the
  acquisitions of Thermo King and Newman Tonks.  (See Notes 16 and
  17 to the Consolidated Financial Statements for additional
  information.)

o Minority interest liabilities at December 31, 1997, totalled
  $127.9 million, which also represented the balance at the end of
  the prior year.  This liability represents the ownership
  interests of other entities in selected consolidated
  subsidiaries of the company, the largest being Dresser
  Industries' 49-percent interest in IDP.  The other minority
  interests relate primarily to joint ventures in India and China.
  IDP's minority interest at December 31, 1996, was $113.4
  million. It increased by $13.7 million, based on IDP's 1997
  earnings and was reduced by $22.7 million, which represented
  increases in advances to Dresser Industries and the effect of
  translation.  The liability for all other minority interests
  totalled $14.5 million at December 31, 1996, and increased to
  $23.5 million during 1997 due to earnings, acquisitions and
  advances.

o Other liabilities (noncurrent) at December 31, 1997, totalled
  $153.4 million, which were $19.2 million higher than the balance
  at December 31, 1996.  The net increase is primarily related to
  the Thermo King acquisition.  These obligations are not expected
  to be paid in the next year.  Generally, these accruals cover
  environmental, insurance, legal and other contractual
  obligations.

  Other information concerning the company's financial resources,
commitments and plans is as follows:

  The average amount of short-term borrowings outstanding,
excluding current maturities of long-term debt, was $380 million in
1997, compared to $58.0 million in 1996.  The weighted average
interest rate during 1997 was 6.2%, compared to 7.8% during the
previous year.  The maximum amounts outstanding during 1997 and
1996, were $2.4 billion and $181.7 million, respectively.

  The company had $1.5 billion in domestic short-term credit lines
at December 31, 1997, and $509.4 million of foreign credit lines
available for working capital purposes, $2.0 billion of which was
unused at the end of the year.  These facilities exceed projected
requirements for 1998 and provide direct support for commercial
paper and indirect support for other financial instruments, such as
letters of credit and comfort letters.

  At December 31, 1997, the debt-to-total capital ratio was 58
percent, as compared to 37 percent at the prior year end.  This
substantial increase resulted from debt issued in connection with
the Thermo King acquisition.

  In 1997, foreign currency translation adjustments decreased
shareholders' equity by $80.6 million.  This change was due to the
strengthening of the U.S. dollar against other currencies in
countries where the company has significant operations and the
local currencies are the functional currencies.  Currency changes
in Australia, Canada, Belgium, France, Germany, India, Italy,
Japan, the Netherlands, Singapore and Spain accounted for nearly
all of the change.

  The company is involved in certain repurchase arrangements
relating to product-distribution and product-financing activities.
As of December 31, 1997, repurchase arrangements relating to
product financing by an independent finance company approximated
$141 million.  It is not practicable to determine the additional
amount subject to repurchase solely under dealer distribution
agreements.  Upon the termination of a dealer, a newly selected
dealer generally acquires the assets of the prior dealer and
assumes any related financial obligation.  Accordingly, the risk of
loss to the company is minimal. Historically, only immaterial
losses have been incurred relating to these arrangements.

  During 1997, the company established two wholly-owned special
purpose subsidiaries to purchase accounts and notes receivable at a
discount from the company on a continuous basis.  These special
purpose subsidiaries simultaneously sell an undivided interest in
these accounts and notes receivable to a financial institution up
to a maximum of $150 million.  The agreements between the special
purpose corporations and the financial institution will expire in
one- and two-year periods.  The company intends to renew these
agreements at their expiration dates with either the current or
another financial institution.  The company is retained as the
servicer of the pooled receivables.  Prior to 1997, the company had
sold an undivided interest in the accounts and notes receivables
directly to financial institutions.  At December 31, 1997 and 1996,
$150 million of such receivables remained uncollected.

  Capital expenditures were $186 million and $195 million in 1997
and 1996, respectively.  The company continues investing to improve
manufacturing productivity, reduce costs and provide environmental
enhancements and advanced technologies for existing facilities.
The capital expenditure program for 1998 is estimated at
approximately $200 million, including amounts approved in prior
periods.  There are no planned projects, either individually or in
the aggregate, that represent a material commitment for the
company.  Many of these projects are subject to review and
cancellation at the option of the company without incurring
substantial charges.

Equity-linked Securities
One of the financing vehicles that the company plans to use in
connection with the refinancing of existing short-term debt from
the Thermo King acquisition is equity-linked securities.  The
equity-linked securities consist of preferred securities (Trust
Preferred Securities) issued by a statutory business trust (Trust)
formed by the company and a forward contract pursuant to which the
company's common stock will be issued three years after the date of
the forward contract.  The Trust applies the proceeds from the
sales of the Trust Preferred Securities to purchase debentures of
the company.  The payments by the company in respect of the
debentures are used by the Trust to satisfy the requirements of the
Trust Preferred Securities.  The forward contracts require the
purchase of the company's common stock in three years at a price,
subject to specified limits, based upon the then fair market value
of the common stock.

Financial Market Risk
The company is exposed to interest and foreign exchange rate risk
due to various transactions.  The company generates foreign
currency exposures in its normal course of business with activity
involving intercompany and third party obligations, dividends,
expenses, commissions, royalties, acquisitions, intercompany
netting, hedging intercompany loans, funding currency accounts and
tax payments.  To mitigate the risk from foreign currency exchange
rate fluctuations, the company will generally enter into forward
currency exchange contracts for the purchase or sale of a currency
in accordance with authorized levels pursuant to the company's
policies and procedures. The company applies sensitivity analysis
and value at risk (VAR) techniques when measuring the company's
exposure to interest rate and currency fluctuations.  VAR is a
measurement of the estimated loss in fair value until currency
positions can be neutralized, recessed or liquidated and assumes a
95-percent confidence level with normal market conditions.  The
potential one day loss, as of December 31, 1997, was $1.7 million
and it is considered insignificant in relation to the company's
results of operations and shareholders' equity.

     With regard to interest rate risk, the effect of a
hypothetical one percentage point increase in interest rates,
across all maturities, would decrease the estimated fair value of
the company's long-term debt at December 31, 1997 from its carrying
value of $2,528 million to $2,453 million.

Stock Split
In August 1997, the board of directors declared a three-for-two
stock split on the company's common stock.  The stock split was
made in the form of a stock dividend, and was paid on September 2,
1997 to shareholders of record on August 19, 1997.  All prior year
per share amounts have been restated to reflect the stock split.

Computer Systems and the Year 2000
The company has conducted a detailed review of its computer systems
to identify those areas that could be affected by problems
associated with the failure of these systems to correctly process
the year 2000.  The company is implementing a coordinated plan
worldwide to replace, modify and/or upgrade its computer hardware
and software to ensure that it will not malfunction as the result
of failing to correctly process the year 2000.  The company has
established a detailed review and testing process to verify whether
its systems and products are or will be year 2000 compliant.  In
addition, the company is working with its suppliers and
distributors on this issue to minimize problems in its supply and
distribution chains.  The company believes that the related costs
to replace, modify and/or upgrade its existing systems and products
to address this problem, will not have a material impact on the
company's financial condition, results of operation, liquidity or
cash flows for any year.

Environmental Matters
The company has been and continues to be dedicated to an
environmental program to reduce the utilization and generation of
hazardous materials during the manufacturing process and to
remediate identified environmental concerns.  As to the latter, the
company currently is engaged in site investigations and remedial
activities to address environmental cleanup from past operations at
current and former manufacturing facilities.

  During 1997, the company spent approximately $9 million on
capital projects for pollution abatement and control and an
additional $5 million for environmental remediation expenditures at
sites presently or formerly owned or leased by the company. It
should be noted that these amounts are difficult to estimate
because environmental improvement costs are generally a part of the
overall improvement costs at a particular plant, and the accurate
estimate of which portion of an improvement or a capital
expenditure relates to an environmental improvement is difficult to
ascertain.  The company believes that these expenditure levels will
continue and may increase over time.  Given the evolving nature of
environmental laws, regulations and technology, the ultimate cost
of future compliance is uncertain.

  The company is a party to environmental lawsuits and claims, and
has received notices of potential violations of environmental laws
and regulations from the Environmental Protection Agency and
similar state authorities. It is identified as a potentially
responsible party (PRP) for cleanup costs associated with off-site
waste disposal at approximately 38 federal Superfund and state
remediation sites, excluding sites as to which the company's
records disclose no involvement or as to which the company's
liability has been fully determined.  For all sites there are other
PRPs and in most instances, the company's site involvement is
minimal. In estimating its liability, the company has not assumed
it will bear the entire cost of remediation of any site to the
exclusion of other PRPs who may be jointly and severally liable.
The ability of other PRPs to participate has been taken into
account, based generally on the parties' financial condition and
probable contributions on a per site basis.  Additional lawsuits
and claims involving environmental matters are likely to arise from
time to time in the future.

  Although uncertainties regarding environmental technology, state
and federal laws and regulations and individual site information
make estimating the liability difficult, management believes that
the total liability for the cost of remediation and environmental
lawsuits and claims will not have a material effect on the
financial condition, results of operations, liquidity or cash flows
of the company for any year.  It should be noted that when the
company estimates its liability for environmental matters, such
estimates are based on current technologies, and the company does
not discount its liability or assume any insurance recoveries.

Forward-looking Statements
  This annual report contains not only historical information, but
also forward-looking statements regarding expectations for future
company performance.  Forward-looking statements involve risk and
uncertainty.  See the company's 1997 Annual Report on Form 10-K for
a discussion of factors which could cause future results to differ
from current expectations.

1996 Compared to 1995


Sales for 1996 totalled $6.7 billion, which generated $683.5
million of operating income and $358.0 million of net earnings
($2.22 per basic share).  These results include a full year's
benefit of the May 31, 1995, acquisition of Clark Equipment Company
(Clark).  The company's 1996 results, excluding the positive effect
of the Clark acquisition, also established company records.

  The 1996 year included a net benefit of $12.6 million to the
company's operating income relating to the following items:

o the sales of the Process Systems Group, which generated $55
  million of operating income ($34.7 million after-tax, or 21
  cents per share);

o a charge of $30 million to operating income for the realignment
  of the company's foreign operations ($18.9 million after-tax, or
  12 cents per share);

o a charge of $7 million to operating income associated with the
  exit or abandonment of selected European product lines ($4.5
  million after-tax, or three cents per share); and

o a $5.4 million charge to operating income to close an Ingersoll-
  Dresser Pump Company (IDP) steel foundry (approximately $2.0
  million after-tax, or one cent per share).

  A comparison of key financial data between 1996 and 1995 follows:

o Net sales in 1996 established a record at $6.7 billion,
  reflecting a 17-percent improvement over 1995's total of $5.7
  billion.  Sales for 1996, excluding Clark, exceeded 1995's total
  by approximately six percent.

o Cost of goods sold in 1996 was 75.0 percent of sales compared to
  75.2 percent in 1995.  Partial liquidations of LIFO (last-in,
  first-out) inventory lowered 1996 costs by $4.8 million as
  compared to a $3.4 million liquidation in 1995.  Excluding the
  effects of the LIFO liquidations, the 1996 cost of goods sold
  relationship to sales would have been 75.1 percent versus 75.3
  percent for 1995.  Excluding Clark's results and the effect of
  the noncomparable items from 1996 and 1995, the relationship of
  cost of goods sold to sales improved slightly in 1996.

o Administrative, selling and service engineering expenses were
  14.8 percent of sales in 1996, compared to 16.1 percent for
  1995.  This marked improvement reflects the net benefit of the
  company's cost-containment and productivity-improvement
  programs, which more than offset the effects of inflation on
  salaries, benefits, materials and other similar items.  The full
  year effect of the Clark acquisition did not cause a
  disproportionate benefit to the 1996 improvement.

o Operating income for 1996 totalled $683.5 million, a 37.5-
  percent increase over 1995's operating income of $497.0 million.
  Excluding Clark's results, operating income in 1996 totalled
  $527.9 million, reflecting a 21.3-percent increase over 1995's
  level without Clark.  In addition, the noncomparable items in
  1996 contributed a $12.6-million benefit to operating income.
  Excluding these items and Clark's results, operating income for
  the year reflected an 18-percent improvement over 1995.

o Interest expense for 1996 totalled $119.9 million.  The interest
  expense reported for 1996 was almost evenly divided between
  interest expense from the combined operations of Ingersoll-Rand
  and Clark, and interest expense associated with the Clark
  acquisition.  Interest expense for 1995 totalled $86.6 million.

o Other income (expense), net, is essentially the sum of three
  activities:  (i) foreign exchange, (ii) equity interests in
  partially-owned equity companies, and (iii) other miscellaneous
  income and expense items.  In 1996, these activities resulted in
  other income of $0.6 million, an unfavorable change of $10.6
  million compared to 1995's net other income of $11.2 million.  A
  review of the components of this category shows that:

     o foreign exchange activity for 1996 totalled $4.8 million
       of losses, as compared to $6.2 million of losses in 1995;

     o earnings from equity interests in partially-owned equity
       companies were approximately $8 million lower than 1995's
       level; and

     o other net miscellaneous expense items were approximately
       $4.0 million higher than the prior year's level, principally
       due to miscellaneous foreign taxes not based on income.

o Dresser-Rand Company is a partnership between the company and
  Dresser Industries, Inc. (Dresser), which is engaged worldwide
  in the reciprocating compressor and turbomachinery businesses.
  The company's pretax profits from its interest in Dresser-Rand
  for 1996 totalled $23.0 million, a modest improvement over the
  $22.0 million in the prior year. Dresser-Rand's results included
  a disappointing 1996 fourth quarter, which was adversely
  affected by cost overruns on a few major orders, higher legal
  expenses and an increase in foreign taxes.

o The company's charges for minority interests totalled $18.9
  million in 1996 versus $14.5 million in 1995.  These charges
  represent the interests of a minority owner (less than 50
  percent) in a consolidated unit of the company.  The largest
  minority interest unit is IDP which represents $17.3 million of
  the 1996 balance versus $12.7 million in 1995.  This increase
  represents a portion of the year over year improvement in IDP's
  operating results.  The remaining charges represent minority
  interests in the company's operations principally in India and
  China.

o The company's effective tax rate for 1996 was 37.0 percent,
  which is consistent with 1995.  The variance from the 35.0
  percent statutory rate was due primarily to the higher tax rates
  associated with foreign earnings, the effect of state and local
  taxes, and the nondeductibility of the goodwill associated with
  acquisitions.

  At December 31, 1996, employment totalled 41,874.  This
represents a net increase of 741 employees over 1995's level of
41,133.  This increase is mainly due to the net result of employees
from businesses acquired and sold during 1996.

  The following highlights the financial results and financial
condition of the company's operations, with the impact of currency
variations where appropriate:

o Cash and cash equivalents totalled $184.1 million at December
  31, 1996, a $46.8-million increase over the December 31, 1995,
  balance of $137.3 million.  In evaluating the net change in cash
  and cash equivalents, cash flows from operating, investing and
  financing activities, and the effect of exchange rate changes,
  should be considered.  Cash flows from operating activities
  provided $385.7 million, investing activities used $149.9
  million and financing activities used $196.5 million.  Exchange
  rate changes during 1996 increased cash and cash equivalents by
  $7.5 million.

o Marketable securities totalled $8.0 million at the end of 1996,
  $1.3 million below the balance at December 31, 1995.  The
  reduction was due to the maturity of certain securities and
  their conversion into cash and cash equivalents, and minimal
  exchange rate fluctuations.

o Receivables totalled $1,066.2 million at December 31, 1996,
  compared to $1,109.9 million at December 31, 1995, a net
  decrease of $43.7 million.  Currency translation decreased the
  receivable balance during the year by $6.5 million, acquisitions
  added approximately $19 million and the reclassification of the
  assets held for sale reduced the balance by approximately $41
  million.  Dispositions reduced receivables by $15.9 million.
  The company's focus on decreasing its receivable base through
  its asset-management program produced a reduction in the average
  days outstanding in receivables to 56.1 days from 1995's level
  of 63.1 days.

o Inventories amounted to $775.1 million at December 31, 1996, a
  reduction of $137.5 million from 1995's level of $912.6 million.
  Acquisitions accounted for a $13-million increase, while
  dispositions reduced inventories by $48 million.  The
  reclassification of assets held for sale reduced inventories by
  approximately $92 million.  The remaining net decrease was due
  primarily to currency movements. The company's emphasis on
  inventory control was demonstrated by the reduction of the
  average months' supply of inventory to 3.0 months at December
  31, 1996, compared to 3.3 months at December 31, 1995.

o Prepaid expenses totalled $74.1 million at the end of 1996,
  $16.1 million higher than the balance at December 31, 1995.  The
  primary cause for the increase in 1996 was higher deposits
  relating to benefit plans.  Foreign exchange activity and
  acquisitions had minimal effect on prepaid expenses.

o Deferred income taxes (current) of $162.4 million at December
  31, 1996, represented the deferred tax benefit of the difference
  between the book and tax values of various current assets and
  liabilities.  A schedule of the components of this balance is in
  Note 14 to the Consolidated Financial Statements.  The year-end
  balance represented an increase of $43.9 million from the
  December 31, 1995, level.  Changes due to foreign currency
  movements had minimal effect on the year's activity.

o The investment in Dresser-Rand totalled $152.6 million at
  December 31, 1996.  This represented a net increase of $58.7
  million from the 1995 balance of $93.9 million.  The components
  of the change for 1996 consisted of income for the current year
  of $23 million, a $92.1 million change in the advance account
  between the entities, a minor increase caused by translation,
  and a reduction caused by a return of capital of $56.7 million.

o The investments in partially-owned equity companies at December
  31, 1996, totalled $223.6 million, which approximated the 1995
  balance of $223.3 million.  Income and dividends from
  investments in partially-owned equity companies were $19.4
  million and $6.8 million, respectively.  Amounts due from these
  units decreased from $20.4 million to $18.3 million at December
  31, 1996.  Currency movements primarily relating to partially-
  owned equity companies in Japan caused approximately a $10-
  million decrease in 1996.

o Net property, plant and equipment decreased by $133 million in
  1996 to a year-end balance of $1,145.4 million.  Fixed assets
  from acquisitions during 1996 added $33.1 million.  Capital
  expenditures in 1996 totalled $195 million.  The
  reclassification of the fixed assets associated with Clark-Hurth
  reduced the balance by approximately $136 million.  Dispositions
  reduced the balance by $40.4 million.  In addition, foreign
  exchange fluctuations decreased the net fixed asset values in
  U.S. dollars by approximately $5 million.  The remaining net
  decrease was the result of depreciation, and sales and
  retirements.

o Intangible assets, net, totalled $1,178.0 million at December
  31, 1996, as compared to $1,253.6 million at December 31, 1995,
  for a net decrease of $75.6 million.  Acquisitions added
  approximately $81 million of intangibles, primarily goodwill,
  during 1996. The reclassification of the intangible assets
  relating to the Clark-Hurth sale reduced the balance by
  approximately $119 million at December 31, 1996.  Amortization
  expense accounted for a reduction of $38.0 million.

o Deferred income taxes (noncurrent) totalled $162.6 million at
  December 31, 1996, which was $27.8 million higher than the 1995
  balance. A listing of the components which comprised the balance
  at December 31, 1996, can be found in Note 14 to the
  Consolidated Financial Statements.

o Other assets totalled $223.8 million at December 31, 1996, a
  decrease of $9.9 million from the December 31, 1995, balance of
  $233.7 million.  Other assets increased approximately $12
  million due to prepaid pensions, which was more than offset by
  decreases due to dispositions and the reclassification of assets
  held for sale. Foreign exchange activity in 1996 had a minimal
  effect on the account balance during the year.

o Accounts payable and accruals totalled $1,095.4 million at
  December 31, 1996, a decrease of $34.4 million from 1995's
  balance of $1,129.8 million.  The reclassification of assets
  held for sale and dispositions decreased accounts payable and
  accruals by $69.2 million.  Restructure of operations added
  approximately $37 million.  Acquisition activity during 1996
  accounted for a $9.4-million increase and foreign exchange
  activity during the year resulted in a decrease of $12.6
  million.

o Loans payable were $162.3 million at the end of 1996, which
  reflects a $6.9-million increase over the $155.4 million at
  December 31, 1995.  Current maturities of long-term debt,
  included in loans payable, were $133.2 million and $102.9
  million at December 31, 1996 and 1995, respectively.  The
  company's aggressive cash-management program decreased short-
  term debt, while foreign currency fluctuations increased short-
  term debt during 1996 by $4.6 million.  The reclassification of
  Clark-Hurth debt to assets held for sale totalled $5.7 million.
  The change in current maturities of long-term debt included
  movement to current maturities of $135.7 million, payments of
  $104.4 million and foreign exchange activity.

o Long-term debt, excluding current maturities, totalled $1,163.8
  million at December 31, 1996, a decrease of $140.6 million from
  the December 31, 1995, balance of $1,304.4 million.  Reductions
  in long-term debt were the result of the reclassifications of
  $135.7 million of current maturities to loans payable and $5.1
  million related to Clark-Hurth debt reclassified to assets held
  for sale.  Foreign currency fluctuations had a minimal effect.

o Postemployment liabilities at December 31, 1996, totalled $814.7
  million, a decrease of $17.4 million from the December 31, 1995,
  balance.  Postemployment liabilities include medical and life
  insurance postretirement benefits, long-term pension and other
  noncurrent postemployment accruals.  The 1996 activity included
  reductions of $22.9 million attributed to units, which were
  either sold in 1996 or early 1997.  Postemployment liabilities
  represent the company's noncurrent liabilities in accordance
  with Statement of Financial Accounting Standard(SFAS) Nos. 87,
  106 and 112. (See Notes 16 and 17 to the Consolidated Financial
  Statements for additional information.)

o Minority interest liabilities at December 31, 1996, totalled
  $127.9 million, which represents a reduction of $54.4 million
  from the $182.3 million balance at December 31, 1995.  This
  liability represents the ownership interests of other entities
  in selected consolidated subsidiaries of the company, the
  largest being Dresser Industries' 49-percent interest in IDP.
  The other minority interests relate primarily to joint ventures
  in India and China. IDP's minority interest at December 31,
  1995, was $170.8 million. It increased by $17.3 million for
  IDP's 1996 net earnings and was reduced by $74.7 million which
  represented increases in advances to Dresser Industries and the
  effect of translation.  The liability for all other minority
  interests totalled $11.5 million at December 31, 1995, and
  increased to $14.5 million at the end of 1996 due to earnings,
  acquisitions and advances.

o Other liabilities (noncurrent) at December 31, 1996, totalled
  $148.7 million, which were $17.4 million higher than the balance
  at December 31, 1995.  These obligations were not expected to be
  paid out in the company's next business cycle. These accruals
  generally cover environmental, insurance, legal and other
  contractual obligations.

o At December 31, 1996, approximately 1.5 million shares of the
  company's common stock were unallocated and the $55.6 million
  paid by the LESOP for those unallocated shares was classified as
  a reduction of shareholders' equity pending allocation to
  participants.  (See Note 12 to the Consolidated Financial
  Statements for additional information.)

  Other information concerning the company's financial resources,
commitments and plans is as follows:

  The average amount of short-term borrowings outstanding,
excluding current maturities of long-term debt, was $58.0 million
in 1996, compared to $156.1 million in 1995.  The weighted average
interest rate during 1996 was 7.8%, compared to 8.3% during 1995.
The maximum amounts outstanding during 1996 and 1995, were $181.7
million and $222.0 million, respectively.

  The company had $800 million in domestic short-term credit lines
at December 31, 1996, and $491.5 million of foreign credit
available for working capital purposes, all of which were unused at
the end of the year.  These facilities provide direct support for
commercial paper and indirect support for other financial
instruments, such as letters of credit and comfort letters.

  At December 31, 1996, the debt-to-total capital ratio was 37
percent, as compared to 42 percent at December 31, 1995.  The
significant improvement in the ratio at December 31, 1996, was
primarily due to the company's continuing focus on cash management
and an increase in the company's equity.

  In 1996, foreign currency translation adjustments decreased
shareholders' equity by $16.5 million.  Translation adjustments of
$6.3 million relating to the sale of foreign investments were
included in income upon the sale of these businesses.  The
remaining change of $10.2 million was due to the strengthening of
the U.S. dollar against other currencies in countries where the
company has significant operations and the local currencies are the
functional currencies.  Currency changes in Australia, Belgium,
Germany, Italy, Japan, Singapore, South Africa and the United
Kingdom accounted for nearly all of the change.

  As a result of the Clark acquisition, the company is involved in
certain repurchase arrangements relating to product-distribution
and product-financing activities.  As of December 31, 1996,
repurchase arrangements relating to product financing by an
independent finance company approximated $106 million.  It is not
practicable to determine the additional amount subject to
repurchase solely under dealer distribution agreements.  Upon the
termination of a dealer, a newly selected dealer generally acquires
the assets of the prior dealer and assumes any related financial
obligation.  Accordingly, the risk of loss to the company is
minimal.  Historically, Clark incurred only immaterial losses
relating to these arrangements.

  In 1996, the company continued to sell an undivided fractional
ownership interest in designated pools of accounts and notes
receivable up to a maximum of $150 million.  Similar agreements
have been in effect since 1987.  These agreements expire in one-
and two-year periods based on the particular pool of receivables
sold.  The company intends to renew these agreements at their
expiration dates with either the current institution or another
financial institution using the basic terms and conditions of the
existing agreements.  At December 31, 1996, $150 million of such
receivables remained uncollected.

REVIEW OF BUSINESS SEGMENTS

Standard Machinery
Standard Machinery Segment sales were $3.1 billion, an increase of
6.1 percent over the $2.9 billion reported for 1996.  Operating
income for 1997 totalled $360.6 million, representing an increase
of 22.0 percent over last year's total of $295.5 million.  The Air
Compressor Group, Melroe and Club Car, all reported improvements in
sales, operating income and operating margins for the year.  The
results for the Construction and Mining Group were adversely
affected by reduced demand in its international markets and
consolidation costs related to its drilling businesses.

Engineered Equipment
The Engineered Equipment Segment is comprised solely of IDP
since the February 14, 1997, sale of the Clark-Hurth Group.
IDP reported sales of $864.2 million for 1997, which was up
slightly from 1996's total of $856.0 million.  IDP's operating
income for 1997 was below the prior year's level due to the
effect of the $24 million restructuring charge recorded during
the fourth quarter of the year.  IDP's continuing focus on cost
reduction and productivity improvements has led to consistently
improved operating profits over the last two years with
additional improvements expected in 1998.  Clark-Hurth reported
sales for the first six weeks of the year of $41.9 million and
generated operating income of $2.7 million (inclusive of the
gain on the sale of this unit).  During 1996, this segment also
included the results of the Process Systems Group, which was
sold in two pieces.  Last year's operating income results for
this segment also included $55 million, which represented the
pretax gains on the sale of the Process Systems Group, as well
as its operating results.

Bearings, Locks and Tools
In 1997, the Bearings, Locks and Tools Segment reported sales of
$2.9 billion, an 18.0-percent increase over the prior year.
Operating income totalled $408.1 million, an increase of $84.8
million over the $323.3 million reported for 1996.

  Bearings and Components Group sales for 1997 exceeded the prior
year by more than three percent.  A strong domestic automotive
industry and continued benefits from cost-containment programs
generated an improvement of approximately $20 million in operating
income for this group in 1997.

  The Architectural Hardware Group's results include the
operations of Newman Tonks since its April 3, 1997, acquisition
date.  Newman Tonks generated approximately $230 million in
sales and contributed approximately $15 million of operating
income to the group's 1997 performance, after the effect of
estimated purchase accounting adjustments.  Excluding Newman
Tonks, sales and operating income reported by the Architectural
Hardware Group for 1997 reflected marked improvements over the
comparable amounts in the prior year.

  The Production Equipment Group sales in 1997 reflected double-
digit improvement over the amount reported for the prior year.
Operating income improved at a much higher rate over 1996 due to a
stronger domestic economy, improved markets in the European-served
area and the benefits derived from cost-containment and
productivity-improvement programs.

Thermo King
On October 31, 1997, Ingersoll-Rand acquired Thermo King, the world
leader in the transport temperature control market.  Thermo King's
results have been included in the consolidated results of the
company since its acquisition.  For the last two months of the
year, Thermo King's sales were $176.9 million, which generated an
operating loss of $0.2 million after the effect of purchase
accounting adjustments.  Excluding the one-time purchase accounting
adjustments, operating income was $18.8 million.  The acquisition
of Thermo King is expected to be accretive to earnings in 1998, the
first full year of combined operation, before considering the
benefits that potential areas of synergy will produce.
                                                                   



Consolidated Statement of Income
In millions except per share amounts
For the years ended December 31     1997         1996         1995
Net sales                       $7,103.3     $6,702.9     $5,729.0
Cost of goods sold               5,263.7      5,029.9      4,310.2
Administrative, selling and
  service engineering
  expenses                       1,079.3        989.5        921.8
Operating income                   760.3        683.5        497.0
Interest expense                  (136.6)      (119.9)       (86.6)
Other income (expense), net         (2.1)         0.6         11.2
Dresser-Rand income                  9.4         23.0         22.0
Minority interests                 (17.3)       (18.9)       (14.5)
Earnings before income taxes       613.7        568.3        429.1
Provision for income taxes         233.2        210.3        158.8
Net earnings                    $  380.5     $  358.0     $  270.3
Basic earnings per share           $2.33        $2.22        $1.70
Diluted earnings per share         $2.31        $2.21        $1.69
See accompanying Notes to Consolidated Financial Statements.


Consolidated Balance Sheet
In millions except share amounts
December 31                                     1997         1996
Assets
Current assets:
Cash and cash equivalents                  $   104.9    $   184.1
Marketable securities                            6.9          8.0
Accounts and notes receivable, less
  allowance for doubtful accounts of
  $33.9 in 1997 and $34.3 in 1996            1,281.5      1,066.2
Inventories                                    854.8        775.1
Prepaid expenses                                89.5         74.1
Assets held for sale                            46.5        265.7
Deferred income taxes                          160.8        162.4
                                             2,544.9      2,535.6
Investments and advances:
Dresser-Rand Company                           115.0        152.6
Partially-owned equity companies               213.0        223.6
                                               328.0        376.2
Property, plant and equipment, at cost:
Land and buildings                             682.7        637.9
Machinery and equipment                      1,592.5      1,465.8
                                             2,275.2      2,103.7
Less-accumulated depreciation                  992.0        958.3
                                             1,283.2      1,145.4
Intangible assets, net                       3,833.0      1,178.0
Deferred income taxes                          214.9        162.6
Other assets                                   211.6        223.8
                                            $8,415.6     $5,621.6
Liabilities and Equity
Current liabilities:
Accounts payable and accruals               $1,370.5     $1,095.4
Loans payable                                  925.1        162.3
Customers' advance payments                     14.5         19.1
Income taxes                                    17.7         13.4
                                             2,327.8      1,290.2
Long-term debt                               2,528.0      1,163.8
Postemployment liabilities                     937.1        814.7
Minority interests                             127.9        127.9
Other liabilities                              153.4        134.2
Shareholders' equity:
Common stock, $2 par value, authorized
  600,000,000 shares; issued:
  1997-167,410,183; 1996-110,276,506           334.8        220.6
Capital in excess of par value                  92.4        143.5
Earnings retained for use in the business    2,156.5      1,869.6
                                             2,583.7      2,233.7
Less: Unallocated LESOP shares, at cost         41.4         55.6
      Treasury stock, at cost                   44.5         11.5
      Foreign currency equity adjustment       156.4         75.8
Shareholders' equity                         2,341.4      2,090.8
                                            $8,415.6     $5,621.6
See accompanying Notes to Consolidated Financial Statements.
                                                                      


Consolidated Statement of Shareholders' Equity

In millions except share amount
December 31                                  1997         1996        1995

Common stock, $2 par value:
  Balance at beginning of year          $   220.6    $   219.4   $   218.3
  Exercise of stock options                   2.7          1.1         1.0
  Issuance of shares under
    stock plans                               0.1          0.1         0.1
  Stock split 3-for-2                       111.4           --          --
  Balance at end of year                    334.8        220.6       219.4
Capital in excess of par value:
  Balance at beginning of year              143.5        121.6        42.4
  Exercise of stock options
    including tax benefits                   49.9         17.5        14.6
  Issuance of shares under
    stock plans                               2.7          1.8         2.0
  Sale of treasury shares to LESOP            --           --         62.7
  Allocation of LESOP shares to
    employees                                 7.7          2.6        (0.1)
  Stock split 3-for-2                      (111.4)          --          --
  Balance at end of year                     92.4        143.5       121.6
Earnings retained for use
  in the business:
  Balance at beginning of year            1,869.6      1,595.5     1,403.7
  Net earnings                              380.5        358.0       270.3
  Cash dividends                            (93.6)       (83.9)      (78.5)
  Balance at end of year                  2,156.5      1,869.6     1,595.5
Unallocated leveraged employee
  stock ownership plan:
  Balance at beginning of year              (55.6)       (70.2)         --
  Purchase of treasury shares                 --            --       (73.1)
  Allocation of shares to employees          14.2         14.6         2.9
  Balance at end of year                    (41.4)       (55.6)      (70.2)
Treasury stock-at cost:
  Common stock, $2 par value:
  Balance at beginning of year              (11.5)       (11.5)      (53.1)
  Purchase of treasury shares               (33.0)          --          --
  Sale of treasury shares to LESOP             --           --        41.6
  Balance at end of year                    (44.5)       (11.5)      (11.5)
Foreign currency
  equity adjustment:
  Balance at beginning of year              (75.8)       (59.3)      (80.0)
  Adjustments due to:
    Translation changes                     (77.5)       (10.2)       20.7
    Dispositions                             (3.1)        (6.3)         --
  Balance at end of year                   (156.4)       (75.8)      (59.3)
Total shareholders' equity               $2,341.4     $2,090.8    $1,795.5


Shares of Capital Stock:
Common stock, $2 par value:
  Balance at beginning of year        110,276,506  109,704,883 109,168,872
  Exercise of stock options             1,346,300      519,550     474,250
  Issuance of shares under
    stock plans                            60,567       52,073      61,761
  Stock split 3-for-2                  55,726,810           --          --
  Balance at end of year              167,410,183  110,276,506 109,704,883
Unallocated leveraged employee
  stock ownership plan:
  Common stock, $2 par value:
  Balance at beginning of year          1,534,004    1,937,198          --
  Purchase of treasury shares                  --           --   2,878,008
  LESOP shares allocated to
    employees                            (448,800)    (403,194)   (940,810)
  Stock split 3-for-2                     626,547           --          --
  Balance at end of year                1,711,751    1,534,004   1,937,198
Treasury stock:
  Common stock, $2 par value:
  Balance at beginning of year            794,724      794,724   3,672,732
  Purchase of treasury shares             694,146           --          --
  Stock split 3-for-2                     512,562           --          --
  Sale of shares to LESOP                      --           --  (2,878,008)
  Balance at end of year                2,001,432      794,724     794,724

See accompanying Notes to Consolidated Financial Statements.


Consolidated Statement of Cash Flows
In millions
For the years ended December 31              1997         1996       1995
Cash flows from operating activities:
 Net earnings                           $   380.5    $   358.0    $ 270.3
 Adjustments to arrive at net cash
   provided by operating activities:
   Depreciation and amortization            212.3        202.6      179.4
   (Gain)/loss on sale of businesses         (7.7)       (58.0)       7.1
   Gain on sale of property, plant
     and equipment                           (3.2)       (10.3)      (3.6)
   Minority interests, net of dividends      14.9         18.0       13.6
   Equity earnings/losses,
     net of dividends                       (19.9)       (35.6)     (41.5)
   Deferred income taxes                      8.2         (4.5)      15.1
   Other items                               27.1         12.3        1.4
   Restructure of operations                 38.7         42.4         --
 Changes in assets and liabilities
   (Increase) decrease in:
     Accounts and notes receivable          (21.5)        (1.0)      50.9
     Inventories                             48.7         (5.3)     (15.2)
     Other current and noncurrent
        assets                               (5.2)       (36.8)     (33.1)
   (Decrease) increase in:
     Accounts payable and accruals           53.8        (17.8)     (37.9)
     Other current and noncurrent
        liabilities                         (23.2)       (78.3)      (2.9)
   Net cash provided by operating
      activities                            703.5        385.7      403.6

Cash flows from investing activities:
 Capital expenditures                      (186.0)      (195.0)    (211.7)
 Proceeds from sales of property,
   plant and equipment                       34.8         33.3       26.5
 Proceeds from business dispositions        252.8        183.8         --
 Acquisitions, net of cash*              (2,891.3)      (133.5)  (1,136.5)
 Increase in marketable securities           (0.4)        (3.6)      (4.6)
 Cash (invested in) or advances (to)
   from equity companies                     47.6        (34.9)      18.4
    Net cash used in investing
      activities                         (2,742.5)      (149.9)  (1,307.9)

Cash flows from financing activities:
 Increase (decrease) in short-term
   borrowings                               685.8        (24.3)     (81.5)
 Debt issuance costs                        (19.1)          --       (6.0)
 Proceeds from long-term debt             1,508.6          0.1      901.7
 Payments of long-term debt                (133.8)      (104.7)     (23.7)
 Net change in debt                       2,041.5       (128.9)     790.5
 Proceeds from exercise of stock
   options                                   43.3         16.3       13.9
 (Purchase)/sale of treasury stock          (33.0)          --      104.3
 Dividends paid                             (93.6)       (83.9)     (78.5)
   Net cash (used in) provided by
     financing activities                 1,958.2       (196.5)     830.2
Effect of exchange rate changes on cash
 and cash equivalents                         1.6          7.5        4.4
 Net (decrease) increase in cash
   and cash equivalents                     (79.2)        46.8      (69.7)
 Cash and cash equivalents-
   beginning of year                        184.1        137.3      207.0
Cash and cash equivalents-end of year   $   104.9    $   184.1    $ 137.3

*Acquisitions:
 Working capital, other than cash       $  (113.8)   $   (22.1) $  (161.4)
 Property, plant and equipment             (186.6)       (33.1)    (292.0)
 Intangibles and other assets            (2,739.5)       (81.7)  (1,330.0)
 Long-term debt and other liabilities       148.6          3.4      646.9
   Net cash used to acquire businesses  $(2,891.3)   $  (133.5) $(1,136.5)

Cash paid during the year for:
 Interest, net of amounts capitalized   $   136.1    $   120.2  $    72.1
 Income taxes                               227.0        262.3      120.1
See accompanying Notes to Consolidated Financial Statements.




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Ingersoll-Rand is a multinational manufacturer of primarily
nonelectrical industrial machinery and equipment.  The company's
principal lines of business are air compressors, architectural
hardware products, automotive parts and components, construction
equipment, golf cars and utility vehicles, pumps, tools and
transport temperature control systems. The company's broad
product line has applications in numerous industries including
automotive, construction, mining, utilities, housing,
recreational and transportation, as well as the general
industrial market. A summary of significant accounting policies
used in the preparation of the accompanying financial statements
follows:

Principles of Consolidation:  The consolidated financial
statements include the accounts of all wholly-owned and
majority-owned subsidiaries.  Intercompany transactions and
balances have been eliminated.  Partially-owned equity companies
are accounted for under the equity method.  In conformity with
generally accepted accounting principles, management has used
estimates and assumptions that affect the reported amounts of
assets, liabilities, revenues and expenses, and the disclosure of
contingent assets and liabilities.  Actual results could differ
from those estimates.

Cash Equivalents:  The company considers all highly liquid
investments, consisting primarily of time deposits and commercial
paper with maturities of three months or less when purchased, to
be cash equivalents.  Cash equivalents were $16.2 million and
$20.7 million at December 31, 1997 and 1996, respectively.

Inventories:  Inventories are generally stated at cost, which is
not in excess of market.  Domestic manufactured inventories of
standard products are valued on the last-in, first-out (LIFO)
method and all other inventories are valued using the first-in,
first-out (FIFO) method.

Property and Depreciation:  The company principally uses
accelerated depreciation methods for assets placed in service
prior to December 31, 1994, and the straight-line method for
assets acquired subsequent to that date.

Intangible Assets:  Intangible assets primarily represent the
excess of the purchase price of acquisitions over the fair value
of the net assets acquired.  Such excess costs are being
amortized on a straight-line basis generally over 40 years.
Goodwill at December 31, 1997 and 1996, was $3.8 billion and $1.1
billion, respectively.  The carrying value of goodwill is
evaluated periodically in relation to the operating performance
and future undiscounted net cash flows of the related business.
Intangible assets also represent costs allocated to patents,
tradenames and other specifically identifiable assets arising
from business acquisitions.  These assets are amortized on a
straight-line basis over their estimated useful lives.
Accumulated amortization at December 31, 1997 and 1996, was
$137.7 million and $82.3 million, respectively. Amortization of
intangible assets was $54.7 million, $38.0 million and $25.3
million in 1997, 1996 and 1995, respectively.

Income Taxes:  Deferred taxes are provided on temporary
differences between assets and liabilities for financial
reporting and tax purposes as measured by enacted tax rates
expected to apply when temporary differences are settled or
realized.  A valuation allowance is established for deferred tax
assets for which realization is not likely.

Environmental Costs:  Environmental expenditures relating to
current operations are expensed or capitalized as appropriate.
Expenditures relating to existing conditions caused by past
operations, which do not contribute to current or future
revenues, are expensed.  Costs to prepare environmental site
evaluations and feasibility studies are accrued when the company
commits to perform them.  Liabilities for remediation costs are
recorded when they are probable and reasonably estimable,
generally no later than the completion of feasibility studies or
the company's commitment to a plan of action.  The assessment of
this liability is calculated based on existing technology, does
not reflect any offset for possible recoveries from insurance
companies and is not discounted.  There were no material changes
in the liability for all periods presented.

Revenue Recognition:  Sales of products are recorded for
financial reporting purposes generally when the products are
shipped.

Research, Engineering and Development Costs:  Research and
development expenditures, including engineering costs, are
expensed when incurred and amounted to $215.5 million in 1997,
$209.3 million in 1996 and $190.4 million in 1995.

Foreign Currency:  Assets and liabilities of foreign entities,
where the local currency is the functional currency, have been
translated at year-end exchange rates, and income and expenses
have been translated using weighted average-for-the-year exchange
rates.  Adjustments resulting from translation have been recorded
in shareholders' equity and are included in net earnings only
upon sale or liquidation of the underlying foreign investment.
  For foreign entities where the U.S. dollar is the functional
currency, inventory and property balances and related income
statement accounts have been translated using historical exchange
rates, and resulting gains and losses have been credited or
charged to net earnings.
  Foreign currency transactions and translations recorded in the
income statement decreased net earnings by $0.5 million, $3.5
million and $3.9 million in 1997, 1996 and 1995, respectively.
Shareholders' equity was decreased in 1997 and 1996 by $80.6
million and $16.5 million, respectively, and increased in 1995 by
$20.7 million due to foreign currency equity adjustments related
to translation and dispositions.
  The company hedges certain foreign currency transactions and
firm foreign currency commitments by entering into forward
exchange contracts (forward contracts).  Gains and losses
associated with currency rate changes on forward contracts
hedging foreign currency transactions are recorded currently in
income.  Gains and losses on forward contracts hedging firm
foreign currency commitments are deferred off-balance sheet and
included as a component of the related transaction, when
recorded; however, a loss is not deferred if deferral would lead
to the recognition of a loss in future periods.  Cash flows
resulting from forward contracts accounted for as hedges of
identifiable transactions or events are classified in the same
category as the cash flows from the items being hedged.

Earnings Per Share:  In 1997, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting Standards
(SFAS) No. 128, "Earnings per Share."  SFAS No. 128 replaced the
calculation of primary and fully diluted earnings per share with
basic and diluted earnings per share.  Basic earnings per share
is based on the weighted average number of common shares
outstanding.  Diluted earnings per share is based on the weighted
average number of common shares outstanding as well as dilutive
potential common shares, which in the company's case comprise
shares issuable under stock benefit plans.  The weighted average
number of common shares outstanding for basic earnings per share
calculations were 163,206,932, 161,238,547 and 159,103,617 for
1997, 1996 and 1995, respectively.  For diluted earnings per
share purposes, these balances increase by 1,617,803, 1,031,137
and 495,479 shares for 1997, 1996 and 1995, respectively, due to
the effect of common equivalent shares which were issuable under
the company's stock benefit plans.  All earnings per share
amounts for all periods have been restated to conform to the SFAS
No. 128 requirements.  The adoption did not have a material
effect on the calculation of EPS.
  In addition, all applicable earnings per share amounts
presented have been restated to reflect the 1997 common stock
split discussed in Note 11.

Stock-Based Compensation:  SFAS No. 123, "Accounting for Stock-
Based Compensation," requires companies to measure employee stock
compensation plans based on the fair value method of accounting
or to continue to apply APB No. 25, "Accounting for Stock Issued
to Employees," and provide pro forma footnote disclosures under
the fair value method in SFAS No. 123.  The company continues to
apply the principles of APB No. 25 and has provided pro forma
fair value disclosures in Note 13.

New Accounting Standards:  In June 1997, the FASB issued SFAS No.
130, "Comprehensive Income," effective January 1, 1998.  The
company will comply with the new rules for the reporting and
display of comprehensive income and its components in 1998.  Also
in June 1997, the FASB issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information."  SFAS No. 131
will be effective January 1, 1998, for the year ending December
31, 1998. The company is evaluating the requirements of the
statement and will comply as required.

NOTE 2 - ACQUISITIONS OF BUSINESSES: On October 31, 1997, the
company acquired Thermo King Corporation (Thermo King), from
Westinghouse Electric Corporation, for approximately $2.56
billion in cash.  Thermo King is the world leader in the
transport temperature control business for trailers, truck
bodies, seagoing containers, buses and light-rail cars.  The
following unaudited pro forma consolidated results of
operations for the years ended December 31, 1997 and 1996,
reflect the acquisition as though it occurred at the
beginning of the period after adjustments for the impact of
interest on acquisition debt, and depreciation and
amortization of assets, including goodwill, to reflect the
purchase price allocation (in millions except per share
amounts):

                                                  (Unaudited)

For the year ended December 31,          1997              1996
   Sales                             $7,965.4          $7,698.4
   Net earnings                         390.1             342.2
   Basic earnings per share             $2.39             $2.12
   Diluted earnings per share            2.37              2.11

   The above pro forma results are not necessarily indicative of
what the actual results would have been had the acquisition
occurred at the beginning of the period.  Further, the pro forma
results are not intended to be a projection of future results of
the combined companies.
   On April 3, 1997, the company completed the acquisition of
Newman Tonks Group PLC (Newman Tonks), a producer of
architectural hardware, for approximately $370 million.
Newman Tonks is a leading manufacturer, specifier and
supplier of branded architectural hardware products with 1996
sales of approximately $425 million.
   On August 27, 1996, the company acquired for $34.3 million
in cash and the assumption of certain liabilities,
substantially all of the assets of Zimmerman International
Corp. (Zimmerman).  Zimmerman manufactures equipment and
systems that assist in handling or lifting tools, components
and materials for a variety of industrial operations. On
January 31, 1996, the company acquired for $95.4 million in
cash and the assumption of certain liabilities, the
Steelcraft Division of MascoTech, Inc.  Steelcraft
manufactures a wide range of cold-rolled and galvanized steel
doors for use primarily in nonresidential construction.
  In May 1995, the company acquired Clark Equipment Company for
approximately $1.5 billion.  Clark's business was the design,
manufacture and sale of compact construction machinery, asphalt
paving equipment, axles and transmissions for off-highway
equipment, golf cars and utility vehicles.  Included among the
assets acquired by the company (indirectly through the
acquisition of the shares of Clark) were the Melroe Company, Blaw-
Knox Construction Equipment Company, Clark-Hurth Components (sold
February 1997, see Note 3) and Club Car, Inc.
  These transactions have been accounted for as purchases and
accordingly, each purchase price was allocated to the acquired
assets and assumed liabilities based on their estimated fair
values.  The company has classified as intangible assets the
costs in excess of the fair value of the net assets of companies
acquired.  The results of all acquired operations have been
included in the consolidated financial statements from their
respective acquisition dates.

NOTE 3 - DISPOSITIONS AND RESTRUCTURE OF OPERATIONS: On February
14, 1997, the company sold the Clark-Hurth Components Group
(Clark-Hurth) to Dana Corporation for approximately $241.5
million of net cash.  At December 31, 1996, the net assets held
for sale totalled $265.7 million and were classified as current
assets on the Consolidated Balance Sheet.  Clark-Hurth results
were reported as part of the Engineered Equipment Segment.  This
group's 1997 results, inclusive of the sale transaction, produced
operating income for the first quarter of approximately $2.7
million, but on an after-tax basis, reduced net earnings by
approximately $3.6 million.
  The company has classified $46.5 million of assets held for
sale as current assets at December 31, 1997.  The majority of
this amount includes certain assets of Newman Tonks that have
been classified as assets held for sale since its acquisition.
The remainder relates to certain drilling assets of the
Construction and Mining Group.  All amounts are expected to be
sold prior to the end of 1998.
  In the fourth quarter of 1997, the company's 51-percent owned
joint venture Ingersoll-Dresser Pump (IDP) recorded a
restructuring charge of $24 million.  The charge includes the
costs of personnel reductions in administrative and sales support
and the consolidation of repair and service operations.  An
additional charge of $14.7 million was recorded for the writedown
of assets held for sale by the Construction and Mining Group.
  In August 1996, the company agreed to sell the remaining assets
of the Process Systems Group to Gencor Industries, Inc.  The sale
was completed during the fourth quarter of 1996 at a price of
approximately $58 million in cash for a pretax gain of
approximately $10 million.  The Process Systems Group was
reported as part of the Engineered Equipment Segment.
  On March 26, 1996, the company sold the assets of the Pulp
Machinery Division (the largest unit in the Process Systems
Group) for approximately $122.3 million to Beloit Corporation, a
subsidiary of Harnischfeger Industries, Inc., for a pretax gain
of $45 million.  In addition, in March 1996, the company sold an
investment for a gain of $4.8 million.
  In the first and fourth quarters of 1996, the company accrued
for the realignment of its foreign operations, principally in
Europe.  These accruals were primarily for severance payments and
pension benefits associated with work force reductions.  Also in
the first quarter of 1996, accruals were established for the exit
or abandonment of selected European product lines and the closing
of a steel foundry.  These accruals totalled $42.4 million and
were charged to operating income.
  On May 15, 1995, the company sold its domestic paving equipment
business to Champion Road Machinery Limited of Canada.  The sale
was a preacquisition requirement, in order to satisfy concerns of
the United States Justice Department, prior to the Clark
acquisition.  The company incurred a $7.1 million pretax loss
associated with this sale.

NOTE 4 - INVENTORIES:  At December 31, inventories were as
follows:

In millions                                  1997           1996
Raw materials and supplies               $  174.1       $  156.2
Work-in-process                             218.6          238.7
Finished goods                              613.8          538.1
                                          1,006.5          933.0
Less-LIFO reserve                           151.7          157.9
Total                                    $  854.8       $  775.1

  Work-in-process inventories are stated after deducting customer
progress payments of $17.8 million in 1997 and $24.9 million in
1996.  At December 31, 1997 and 1996, LIFO inventories comprised
approximately 40 percent and 43 percent, respectively, of
consolidated inventories.
  During the periods presented, certain inventory quantities were
reduced, resulting in partial liquidations of LIFO layers.  This
decreased cost of goods sold by $4.1 million in 1997, $4.8
million in 1996 and $3.4 million in 1995.  These liquidations
increased net earnings in 1997, 1996 and 1995 by approximately
$2.5 million, $2.9 million and $2.1 million, respectively.

NOTE 5 - INVESTMENTS IN PARTIALLY-OWNED EQUITY COMPANIES:  The
company has numerous investments, ranging from 20 percent to 50
percent, in companies that operate in similar lines of business.
The company's investments in and amounts due from partially-owned
equity companies amounted to $199.5 million and $13.5 million,
respectively, at December 31, 1997, and $205.3 million and $18.3
million, respectively, at December 31, 1996.  The company's
equity in the net earnings of its partially-owned equity
companies was $19.2 million, $19.4 million and $26.2 million in
1997, 1996 and 1995, respectively.
  The company received dividends based on its equity interests in
these companies of $8.7 million, $6.8 million and $6.7 million in
1997, 1996 and 1995, respectively.
  Summarized financial information for these partially-owned
equity companies at December 31, and for the years presented was:

In millions                                  1997           1996
Current assets                           $  471.2       $  463.9
Property, plant and
  equipment, net                            258.4          279.4
Other assets                                 19.6           29.7
Total assets                             $  749.2       $  773.0
Current liabilities                      $  242.4       $  243.7
Long-term debt                               75.3           78.2
Other liabilities                            31.3           37.0
Total shareholders' equity                  400.2          414.1
Total liabilities
  and equity                             $  749.2       $  773.0

In millions                    1997          1996           1995
Net sales                  $  886.8      $  890.5       $  872.5
Gross profit                  152.2         165.0          180.2
Net earnings                   40.2          42.6           55.8

NOTE 6 - DRESSER-RAND COMPANY:  Dresser-Rand Company, a
manufacturer of reciprocating compressor and turbomachinery
products, is a partnership between Dresser Industries, Inc. (51
percent), and the company (49 percent).  The company's investment
in Dresser-Rand is accounted for using the equity method of
accounting.
  The company's investment in Dresser-Rand was $154.7 million and
$149.4 million at December 31, 1997 and 1996, respectively.  The
company owed Dresser-Rand $39.7 million at December 31, 1997, and
Dresser-Rand owed the company $3.2 million at December 31, 1996.
During 1996, Dresser-Rand approved and distributed $115.7 million
of capital to its partners of which $56.7 million was distributed
to the company.  Dresser-Rand recorded a $36.4 million
restructuring charge in the fourth quarter of 1997, which reduced
the company's earnings proportionally.
  Summarized financial information for Dresser-Rand at December 31,
and for the years presented was:

In millions                                  1997           1996
Current assets                           $  488.4       $  496.5
Property, plant and
  equipment, net                            248.2          262.5
Other assets                                 54.1           49.8
Total assets                                790.7          808.8
Deduct:
Current liabilities                         368.4          306.4
Other liabilities                           195.8          204.4
                                            564.2          510.8
Net partners' equity
  and advances                           $  226.5       $  298.0

In millions                    1997          1996           1995
Net sales                  $1,161.6      $1,179.9       $1,081.4
Gross profit                  230.2         226.7          212.5
Net earnings                   19.2          46.9           44.9

NOTE 7 - ACCOUNTS PAYABLE AND ACCRUALS:  Accounts payable and
accruals at December 31, were:

In millions                                  1997           1996
Accounts payable                         $  411.1       $  295.8
Accrued:
  Payrolls and benefits                     253.1          184.0
  Taxes other than income                    41.4           40.4
  Insurance and claims                      114.5          104.1
  Postemployment benefits                    68.7           99.4
  Warranties                                 76.2           45.0
  Interest                                   41.5           33.6
Other accruals                              364.0          293.1
                                         $1,370.5       $1,095.4

NOTE 8 - FINANCIAL INSTRUMENTS:  The company, as a large
multinational company, maintains significant operations in
foreign countries.  As a result of these global activities, the
company is exposed to changes in foreign currency exchange rates,
which affect the results of operations and financial condition.
The company manages exposure to changes in foreign currency
exchange rates through its normal operating and financing
activities, as well as through the use of financial instruments.
Generally, the only financial instruments the company utilizes
are forward exchange contracts.
  The purpose of the company's hedging activities is to mitigate
the impact of changes in foreign currency exchange rates.  The
company attempts to hedge transaction exposures through natural
offsets. To the extent that this is not practicable, major
exposure areas considered for hedging include foreign currency
denominated receivables and payables, intercompany loans, firm
committed transactions, anticipated sales and purchases, and
dividends relating to foreign subsidiaries.  The following table
summarizes by major currency the contractual amounts of the
company's forward contracts in U.S. dollars.  Foreign currency
amounts are translated at year-end rates at the respective
reporting date.  The "buy" amounts represent the U.S. equivalent
of commitments to purchase foreign currencies, and the "sell"
amounts represent the U.S. equivalent of commitments to sell
foreign currencies.  Some of the forward contracts involve the
exchange of two foreign currencies according to local needs in
foreign subsidiaries.
  At December 31, the contractual amounts were:

In millions                      1997                 1996
                             Buy      Sell        Buy      Sell
Australian dollars        $ 19.5    $  0.5      $ 9.7    $  1.8
Canadian dollars            20.3      12.4       15.2       5.5
Czech koruna                  --      16.2         --        --
Deutsche marks              27.1     194.0       10.9     131.3
French francs                2.7      64.0        4.8      14.1
Irish punts                 71.7       --         0.8        --
Italian lira                47.0      32.9       31.7       4.5
Japanese yen                20.4       4.9       13.8       4.4
British pounds              37.0     113.7       54.0     155.5
South African rand           --        2.5        1.5      14.8
Spanish pesetas              5.5      18.9        1.2       1.7
Other                       10.3       5.8       16.9       6.3
  Total                   $261.5    $465.8     $160.5    $339.9

  Forward contracts for normal operating activities have
maturities of one to 12 months; and forward contracts for
intercompany loans have original maturities that range from one
month to 36 months.
  The company's forward contracts do not subject the company to
risk due to foreign exchange rate movement, since gains and
losses on these contracts generally offset losses and gains on
the assets, liabilities or other transactions being hedged.
  The counterparties to the company's forward contracts consist
of a number of major international financial institutions.  The
credit ratings and concentration of risk of these financial
institutions are monitored on a continuing basis and present no
significant credit risk to the company.
  The carrying value of cash and cash equivalents, marketable
securities (classified as held to maturity), accounts receivable,
short-term borrowings and accounts payable are a reasonable
estimate of their fair value due to the short-term nature of
these instruments.  The following table summarizes the estimated
fair value of the company's remaining financial instruments at
December 31:

In millions                                  1997           1996
Long-term debt:
Carrying value                           $2,528.0       $1,163.8
Estimated fair value                      2,587.4        1,194.8
Forward contracts:
Contract (notional) amounts:
  Buy contracts                          $  261.5       $  160.5
  Sell contracts                            465.8          339.9
Fair (market) values:
  Buy contracts                             260.9          161.0
  Sell contracts                            461.6          349.5

  Fair value of long-term debt was determined by reference to the
December 31, 1997 and 1996, market values of comparably rated
debt instruments.  Fair values of forward contracts are based on
dealer quotes at the respective reporting dates.

NOTE 9 - LONG-TERM DEBT AND CREDIT FACILITIES:
At December 31, long-term debt consisted of:

In millions                                 1997            1996
6 7/8% Notes Due 2003                   $  100.0        $  100.0
6.255% Notes Due 2001                      400.0              --
9% Debentures Due 2021                     125.0           125.0
7.20% Debentures Due 2025                  150.0           150.0
6.48% Debentures Due 2025                  150.0           150.0
6.391% Debentures Due 2027                 200.0              --
6.443% Debentures Due 2027                 200.0              --
Medium Term Notes Due 1999-2028, at
  an average rate of 6.43%               1,039.9           467.5
9.75% Clark Debentures Due 2001            100.0           100.0
Clark Medium Term Notes Due 2023,
  at an average rate of 8.22%               50.2            60.2
Other domestic and foreign
  loans and notes, at end-
  of-year average interest
  rates of 7.321% in 1997
  and 5.53% in 1996, maturing
  in various amounts to 2013                12.9           11.1
                                         $2,528.0       $1,163.8

  Debt retirements for the next five years are as follows:
$145.1 million in 1998, $252.3 million in 1999, $101.7 million in
2000, $761.8 million in 2001 and $82.3 million in 2002.
  In November 1997, the company issued $400.0 million of notes at
6.255% per annum due 2001.  In addition, the company issued two
series of debentures for $200.0 million each at 6.391% per annum
and 6.443% per annum, respectively, due in 2027.  The 6.391%
debentures and the 6.443% debentures may be repaid at the option
of the holder on November 15, 2004 and November 15, 2007,
respectively, and each November 15 thereafter.  During November
and December 1997, the company also issued medium-term notes
totalling $706.4 million at an average annual rate of 6.30% with
maturities ranging from 1999 to 2028.  Some of the medium-term
notes may be repaid at the option of the holder prior to the
stated maturity.  The proceeds from these financings were used to
refinance short-term borrowings related to the acquisition of
Thermo King.
  In June 1995, the company issued $150.0 million of debentures
at 7.20% per annum, which are not redeemable prior to maturity in
2025.  These debentures require annual installments of $7.5
million into a sinking fund beginning June 1, 2006.  Also in June
1995, the company issued $150.0 million of debentures at 6.48%
per annum due in 2025, which may be repaid at the option of the
holder on June 1, 2005.  During July and August 1995, the company
issued medium-term notes totalling $600.0 million at an average
rate of 6.57% with maturities ranging from 1997 to 2004.  The
proceeds from these financings were used to refinance short-term
borrowings related to the acquisition of Clark.
  At December 31, 1997, the company had a 364-day and a five-year
committed revolving credit line totalling $1.5 billion, both of
which were unused.  These lines provide support for commercial
paper and indirectly provide support for other financial
instruments, such as letters of credit and comfort letters, as
required in the normal course of business.  The company
compensates banks for these lines with fees equal to a weighted
average of 0.06% per annum.  Available foreign lines of credit
were $509.4 million, of which $450.4 million were unused at
December 31, 1997.  No major cash balances were subject to
withdrawal restrictions.  At December 31, 1997, the average rate
of interest for loans payable, excluding the current portion of
long-term debt, was 6.387%.
  Capitalized interest on construction and other capital projects
amounted to $3.2 million, $4.6 million and $3.5 million in 1997,
1996 and 1995, respectively.  Interest income, included in other
income (expense), net, was $14.9 million, $10.3 million and $11.5
million in 1997, 1996 and 1995, respectively.

NOTE 10 - COMMITMENTS AND CONTINGENCIES:  The company is involved
in various litigations, claims and administrative proceedings,
including environmental matters, arising in the normal course of
business.  In assessing its potential environmental liability,
the company bases its estimates on current technologies and does
not discount its liability or assume any insurance recoveries.
Amounts recorded for identified contingent liabilities are
estimates, which are reviewed periodically and adjusted to
reflect additional information when it becomes available.
Subject to the uncertainties inherent in estimating future costs
for contingent liabilities, management believes that recovery or
liability with respect to these matters would not have a material
effect on the financial condition, results of operations,
liquidity or cash flows of the company for any year.
  During 1997, the company established two wholly-owned special
purpose subsidiaries to purchase accounts and notes receivable at
a discount from the company on a continuous basis.  These special
purpose subsidiaries simultaneously sell an undivided interest in
these accounts and notes receivable to a financial institution up
to a maximum of $150 million.  The agreements between the special
purpose corporations and the financial institution will expire in
one- and two-year periods.  These agreements will be renewed with
either the current or another financial institution.  The company
is retained as the servicer of the pooled receivables.  Prior to
1997, the company had sold an undivided interest in the accounts
and notes receivables directly to financial institutions.  During
1997, 1996 and 1995, such sales of receivables amounted to $614.0
million, $593.7 million and $533.7 million, respectively.  At
December 31, 1997 and 1996, $150 million of such sold receivables
remained uncollected.
  Receivables, excluding the designated pool of accounts and
notes receivable, sold during 1997, 1996 and 1995 with recourse,
amounted to $56.9 million, $147.4 million and $175.9 million,
respectively. At December 31, 1997 and 1996, $13.3 million and
$36.2 million, respectively, of such receivables sold remained
uncollected.
  As of December 31, 1997, the company had no significant
concentrations of credit risk in trade receivables due to the
large number of customers which comprised its receivables base
and their dispersion across different industries and countries.
  In the normal course of business, the company has issued
several direct and indirect guarantees, including performance
letters of credit, totalling approximately $133.8 million at
December 31, 1997.  Management believes these guarantees will not
adversely affect the consolidated financial statements.
  Additionally, the company has entered into certain repurchase
arrangements relating to product-distribution and product-
financing activities involving the company's operations.  As of
December 31, 1997, repurchase arrangements relating to product
financing by an independent finance company approximate $141
million.  It is not practicable to determine the additional
amount subject to repurchase solely under dealer-distribution
agreements.  The total exposure to loss on these repurchase
arrangements is subject to a $1 million ultimate net loss
provision.  The company has also guaranteed the residual value of
leased product in the aggregate amount of $28.7 million.  Upon
the termination of a dealer, a newly selected dealer generally
acquires the assets of the prior dealer and assumes any related
financial obligation.  Accordingly, the risk of loss to the
company is minimal, and historically, only immaterial losses have
been incurred relating to these arrangements.
  Clark sold Clark Material Handling Company (CMHC), its forklift
truck business, to Terex Corporation (Terex) in 1992.  In 1996,
Terex sold CMHC to CMHC Acquisition Corp. (CMHCAC).   Terex and
CMHCAC assumed substantially all of the obligations for existing
and future product liability claims involving CMHC products.  In
the event that Terex and CMHCAC fail to perform or are unable to
discharge any of the assumed obligations, the company could be
required to discharge such obligations.  While the aggregate
losses associated with these obligations could be
significant, the company does not believe they would materially
affect the financial condition, the results of operations,
liquidity or cash flows of the company in any year.
  Certain office and warehouse facilities, transportation
vehicles and data processing equipment are leased.  Total rental
expense was $76.2 million in 1997, $66.9 million in 1996 and
$64.7 million in 1995.  Minimum lease payments required under
noncancellable operating leases with terms in excess of one year
for the next five years and thereafter, are as follows: $47.9
million in 1998, $36.5 million in 1999, $24.7 million in 2000,
$13.6 million in 2001, $10.9 million in 2002 and $23.1 million
thereafter.

NOTE 11 - COMMON STOCK: In May 1997, the board of directors
authorized the repurchase of up to 15.0 million shares (adjusted
for the three-for-two stock split) of the company's common stock
at management's discretion.  Shares repurchased will be used to
replenish the company's treasury shares, which were substantially
depleted by a transfer of shares to the Leveraged Employee Stock
Ownership Plan, and for general corporate purposes.
  In August 1997, the board of directors declared a three-for-two
stock split of the company's common stock.  The stock split was
made in the form of a stock dividend, and was paid on September
2, 1997, to shareholders of record on August 19, 1997. All prior
year per share amounts have been restated to reflect the stock
split.
  On December 7, 1988, the board of directors adopted a Rights
Plan (Plan) and declared a dividend distribution of one right for
each then outstanding share of the company's common stock.  As a
result of the two-for-one stock split in 1992, and the three-for-
two stock split in 1997, each current outstanding share of the
company's common stock has one-third of a right associated with
it.  In December 1994, the Plan was amended by the board of
directors.  Under the Plan as amended, each right entitles the
holder to purchase 1/100th of a share of Series A preference
stock at an exercise price of $130.  The company has reserved
563,000 shares of Series A preference stock for issuance upon
exercise of the rights.  The rights become exercisable in
accordance with the provisions of the Plan on (i) the tenth day
following the acquisition by a person or group of persons of 15
percent or more of the company's common stock, (ii) the tenth day
after the commencement of a tender or exchange offer for 15
percent or more of the company's common stock, or (iii) the
determination by the board of directors that a person is an
Adverse Person as defined in the Plan (Distribution Date).  Upon
either a person's becoming an Acquiring Person as defined in the
Plan, or the board's determination that a person is an Adverse
Person, or the occurrence of certain other events following the
Distribution Date, each holder of a right shall thereafter have a
right to receive the common stock of the company (or in certain
circumstances, the stock of an acquiring entity) for a price of
approximately half its value.  The rights are not exercisable by
any Acquiring Person or Adverse Person.  The Plan as amended
provides that the board of directors, at its option any time
after any person becomes an Acquiring Person or an Adverse
Person, may exchange all or part of the outstanding and
exercisable rights for shares of common stock, currently at an
exchange ratio of one right for two shares.  The right of the
holders to exercise the rights to purchase shares automatically
terminates if the board orders an exchange of rights for shares.
The rights may be redeemed by the company for one cent per right
in accordance with the provisions of the Plan.  The rights will
expire on December 22, 1998, unless redeemed earlier by the
company.

NOTE 12 - LEVERAGED EMPLOYEE STOCK OWNERSHIP PLAN:  At the time
of its acquisition by the company, Clark sponsored a Leveraged
Employee Stock Ownership Plan (LESOP) for eligible employees.  In
connection with the acquisition, the company purchased the
LESOP's shares for $176.6 million.  The company determined it
would continue the LESOP to fund certain employee benefit plans.
Accordingly, on September 28, 1995, the company sold 2,878,008
shares (pre-1997 stock split) of its common stock held in
treasury to the LESOP, for a price of $36.25 per share (the
closing price of the common stock on September 27, 1995, on the
New York Stock Exchange) or an aggregate of $104.3 million.  At
December 31, 1997, approximately 1.7 million shares (post-1997
stock split) remain unallocated and the $41.4 million paid by the
LESOP for those unallocated shares is classified as a reduction
of shareholders' equity pending allocation to participants.  At
December 31, 1997, the LESOP owed the company $22.8 million
payable in monthly installments through 2001.  Company
contributions to the LESOP and dividends on unallocated shares
are used to make loan principal and interest payments.
With each principal and interest payment, the LESOP allocates a
portion of the common stock to participating employees.

NOTE 13 - INCENTIVE STOCK PLANS:  Under the company's Incentive
Stock Plans, key employees have been granted options to purchase
common shares at prices not less than the fair market value at
the date of the grant.  Options become exercisable one year after
the date of the grant and expire at the end of ten years.  The
plans, approved in 1985, 1990 and 1995, also authorize stock
appreciation rights (SARs) and stock awards.
  As permitted by SFAS No. 123, "Accounting for Stock Based
Compensation," the company continues to account for its stock
plans in accordance with Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees," and its related
interpretations.  Accordingly, compensation expense has been
recognized for SARs (which were generally settled for cash) and
for stock awards.  Had compensation cost for the applicable
provisions of the company's incentive stock plans been determined
based upon the fair value at the grant date for awards issued in
1996 and 1997 in accordance with the methodology prescribed under
SFAS No. 123, the company's net earnings and diluted earnings per
share would have been reduced by approximately $10.0 million (or
six cents per share) for 1997, $6.7 million (or four cents per
share) for 1996 and $1.6 million (or one cent per share) for
1995.  On December 15, 1996, the company canceled SARs which were
previously attached to 1,839,000 stock options (pre-split basis).
Included in the SFAS No. 123 expense figures for 1997 and 1996
were approximately $1.5 million (or one cent per share) and $2.9
million (or two cents per share), respectively, for the cost of
this revocation.  The average fair values of the options granted
during 1997, 1996 and 1995, were estimated at $8.55, $7.31 and
$5.77, respectively, on the date of grant, using the Black-
Scholes option-pricing model, which included the following
assumptions:
                                  1997        1996      1995
  Dividend yield                  1.61%       1.86%     2.04%
  Volatility                     22.59%      22.52%    22.69%
  Risk-free interest rate         6.52%       6.17%     6.42%
  Forfeiture rate                    --          --        --
  Expected life                 4 years     4 years   4 years

  Changes in options outstanding under the plans were as follows:

                               Shares subject       Option price
                                    to option    range per share
January 1, 1996                     5,403,600        $7.97-26.71
Granted                             1,899,750        24.96-31.13
Exercised                          (1,348,200)        7.97-24.17
December 31, 1996                   5,955,150       $13.83-31.13
Granted                             2,031,000        30.33-41.28
Exercised                          (1,905,250)       13.83-28.54
Cancelled                             (37,500)       26.21-26.63
December 31, 1997                   6,043,400       $13.83-41.28
                                                                 
   At December 31, 1997, there were 304,200 SARs outstanding with
no stock options attached.  The company has reserved 2,705,342
shares for future awards at December 31, 1997.  In addition,
716,182 shares of common stock were reserved for future issue,
contingent upon attainment of certain performance goals and
future service.
   The following table summarizes information concerning currently
outstanding and exercisable options:
<TABLE>
                                     Options                Options
                                   Outstanding            Exercisable
                               Weighted    Weighted               Weighted
                     Number     Average     Average    Number     Average
     Range of     Outstanding  Remaining   Exercise  Exercisable  Exercise
  Exercise Price  at 12/31/97    Life       Price    at 12/31/97    Price

  <C>                 <C>         <C>       <C>         <C>        <C>
  $13.83-15.00        38,750      1.0       $14.41      38,750     $14.41
   15.01-20.00       253,800      3.2        16.24     253,800      16.24
   20.01-25.00     2,435,825      6.2        22.84   2,435,825      22.84
   25.01-30.00     1,270,525      8.4        26.31   1,270,525      26.31
   30.01-35.00     1,897,050      9.3        33.62      13,500      31.13
   35.01-40.00            --       --           --          --         --
   40.01-41.28       147,450      9.9        40.53          --         --
  $13.83-41.28     6,043,400                         4,012,400
</TABLE>
  The company also maintains a shareholder-approved Management Incentive
Unit Award Plan. Under the plan, qualifying executives are awarded
incentive units.  When dividends are paid on common stock, dividends
are awarded to unit holders, one-half of which is paid in cash, 
the remaining half of which is credited to the participant's account
in the form of so-called common stock equivalents.  The fair value
of accumulated common stock equivalents is paid in cash upon the
participant's retirement.  The number of common stock equivalents
credited to participants' accounts at December 31, 1997 and 1996,
are 552,828 and 589,571, respectively.

NOTE 14 - INCOME TAXES:  Earnings before income taxes for the
years ended December 31, were taxed within the following
jurisdictions:

In millions                    1997          1996           1995
United States                $463.2        $467.3         $308.0
Foreign                       150.5         101.0          121.1
Total                        $613.7        $568.3         $429.1


  The provision for income taxes was as follows:

In millions                    1997          1996           1995
Current tax expense:
  United States              $179.2        $186.6         $101.3
  Foreign                      66.3          49.5           42.7
  Total current               245.5         236.1          144.0
Deferred tax expense:
  United States                (0.9)        (16.4)          10.6
  Foreign                     (11.4)         (9.4)           4.2
  Total deferred              (12.3)        (25.8)          14.8
  Total provision for
    income taxes             $233.2        $210.3         $158.8

  The provision for income taxes differs from the amount of
income taxes determined by applying the applicable U.S. statutory
income tax rate to pretax income, as a result of the following
differences:
                                       Percent of pretax income
                                     1997       1996       1995
Statutory U.S. rates                 35.0%      35.0%      35.0%
Increase (decrease) in rates
  resulting from:
  Amortization of goodwill            2.0        1.7        1.2
  Foreign operations                  0.4        0.8        1.0
  Earnings/losses of equity
   companies                         (0.5)      (0.8)      (1.8)
  State and local income taxes,
    net of U.S. tax                   1.3        1.5        1.3
  Puerto Rico - Sec 936 Credit       (0.5)       --          --
  Other                               0.3       (1.2)       0.3
Effective tax rates                  38.0%      37.0%      37.0%
  A summary of the deferred tax accounts at December 31, follows:

In millions                                      1997       1996       1995
Current deferred assets and (liabilities):
  Differences between book and tax bases
    of inventories and receivables             $ 35.7     $ 37.9     $ 30.8
  Differences between book and tax
    expense for other employee related
    benefits and allowances                      44.2       39.3       35.3
  Provisions for restructure of
    operations and plant closings
    not yet deductible for tax purposes          12.5       11.1        9.4
  Other reserves and valuation
    allowances in excess of tax deductions       60.4       61.6       53.1
  Other differences between tax and
    financial statement values                    8.0       12.5      (10.1)
    Gross current deferred net tax assets       160.8      162.4      118.5
Noncurrent deferred tax assets and
  (liabilities):
  Tax items associated with equity companies     10.9       10.7       11.1
  Postretirement and postemployment
    benefits other than pensions in
    excess of tax deductions                    266.1      246.7      252.5
  Other reserves in excess of tax expense       112.2       80.5       65.0
  Tax depreciation in excess of book
    depreciation                                (66.8)     (60.2)     (85.5)
  Pension contributions in excess of
    book expense                                (36.9)     (52.0)     (51.2)
  Taxes provided for unrepatriated
    foreign earnings                            (28.5)     (28.5)     (28.5)
    Gross noncurrent deferred net tax assets    257.0      197.2      163.4
    Less:  deferred tax valuation allowances    (42.1)     (34.6)     (28.6)
      Total net deferred tax assets            $375.7     $325.0     $253.3

  A total of $28.5 million of deferred taxes have been provided
for a portion of the undistributed earnings of subsidiaries
operating outside of the United States.  As to the remainder,
these earnings have been, and under current plans, will continue
to be reinvested.  Therefore, it is not practicable to estimate
the amount of additional taxes which may be payable upon
repatriation.

NOTE 15 - BUSINESS SEGMENT INFORMATION:   A description of
business segments and operations by business segment and
geographic area for the three years ended December 31, 1997, were
as follows:

DESCRIPTION OF BUSINESS SEGMENTS
Ingersoll-Rand's operations are organized into four worldwide
business segments:  Standard Machinery; Engineered Equipment;
Bearings, Locks and Tools; and Thermo King.

Standard Machinery
The segment's products are categorized into four groups:

  Air Compressor - products include portable, reciprocating,
rotary and centrifugal air compressors, vacuum pumps, air drying
and filtering systems, and other compressor accessories.  The
products are used primarily to supply pressurized air to
industrial plants, refineries, chemical plants, electrical
utilities and service stations.

  Construction and Mining - manufactures vibratory compactors,
asphalt pavers, rock drills, blasthole drills, water-well drills,
crawler drills, jumbo drills, jackhammers and rock and roof
stabilizers primarily for the construction, highway maintenance,
metals-mining and well-drilling industries.

  Melroe - manufactures skid-steer loaders, compact hydraulic
excavators and self-propelled agricultural sprayers.  The
products are used primarily by the construction and agricultural
industries.

  Club Car - manufactures golf cars and utility vehicles which
are used primarily in the golf and resort industries.

Engineered Equipment
The segment's products are categorized into three groups:

  Pump - manufactures centrifugal and reciprocating pumps.  These
products serve oil production and refining, chemical process,
marine, agricultural, electric utility and general manufacturing
industries.

  Process Systems - consisted of pulp and paper processing
equipment, pelleting equipment, filters, aerators and dewatering
systems.  This equipment was used in the pulp and paper, food and
agricultural, and minerals-processing industries.  This group was
sold during 1996.

  Clark-Hurth - manufactured a broad line of axles and
transmissions for the off-highway vehicle industry.  This group
was sold on February 14, 1997.

Bearings, Locks and Tools
The segment's products are categorized into three groups:

  Bearings and Components - principal products include needle
bearings, needle roller bearings, needle rollers, thrust
bearings, tapered roller bearings, drawn cup bearings,
high-precision ball bearings, spherical bearings, radial
bearings, universal joints, dowel pins, swagers and precision
components. These products are sold principally to durables-
industry customers primarily in the automotive and aerospace
markets.

  Production Equipment - manufactures air-powered tools, hoists
and winches, air motors and air starters, automated assembly and
test systems, air and electric automated fastener tightening
systems, and waterjet cutting systems.  These products are sold
to general manufacturing industries and to the appliance,
aircraft, construction and automotive industries.

  Architectural Hardware - major products include locks, steel
doors, door closers and exit devices used in commercial and
residential construction and the retail hardware market.  Prior
to January 1, 1996, this group was the Door Hardware Group.

Thermo King
This segment principally operates in one industry, which includes
the design, manufacture and distribution of transport temperature
control equipment.  These products are primarily used in the
transport temperature control business for trailers, truck
bodies, seagoing containers, buses and light-rail cars.  Thermo
King was acquired on October 31, 1997.
<TABLE>
Operations by Business Segments
Dollar amounts in millions
For the years ended                         % of                % of                 % of
<S>                                 <C>    <S>          <C>    <S>           <C>    <S>
December 31                         1997   total        1996   total         1995   total
Standard Machinery
<S>                             <C>          <C>    <C>          <C>     <C>          <C>
Sales                           $3,091.4     44%    $2,913.1     43%     $2,270.6     40%
Operating income                   360.6     45%       295.5     41%        222.6     41%
Operating income as % of sales      11.7%               10.1%                 9.8%
Identifiable assets              2,481.0             2,560.2              2,528.0
Depreciation and amortization       85.4                81.7                 62.7
Capital expenditures                59.9                59.9                 56.7

Engineered Equipment
Sales                              906.1     13%     1,307.7     20%      1,216.2     21%
Operating income                    40.6      5%       108.5     15%         49.5      9%
Operating income as % of sales       4.5%                8.3%                 4.1%
Identifiable assets                458.2               904.0              1,061.8
Depreciation and amortization       23.4                44.5                 40.0
Capital expenditures                19.2                36.7                 42.3

Bearings, Locks and Tools
Sales                            2,928.9     41%     2,482.1     37%      2,242.2     39%
Operating income                   408.1     50%       323.3     44%        269.1     50%
Operating income as % of sales      13.9%               13.0%                12.0%
Identifiable assets              1,808.2             1,391.0              1,208.1
Depreciation and amortization       88.5                74.0                 75.0
Capital expenditures                97.8                97.2                107.9

Thermo King
Sales                              176.9      2%          --                   --
Operating loss                      (0.2)     -%          --                   --
Operating loss as % of sales        (0.1)%                --                   --
Identifiable assets              2,808.4                  --                   --
Depreciation and amortization       13.6                  --                   --
Capital expenditures                 5.8                  --                   --

Total
Sales                            7,103.3    100%     6,702.9    100%      5,729.0    100%
Operating income                   809.1    100%       727.3    100%        541.2    100%
Operating income as % of sales      11.4%               10.9%                 9.4%
Identifiable assets              7,555.8             4,855.2              4,797.9
Depreciation and amortization      210.9               200.2                177.7
Capital expenditures               182.7               193.8                206.9
General corporate expenses
  charged to operating income      (48.8)              (43.8)               (44.2)
Operating income                   760.3               683.5                497.0

Unallocated
Interest expense                  (136.6)             (119.9)               (86.6)
Other income (expense), net         (2.1)                0.6                 11.2
Dresser-Rand income                  9.4                23.0                 22.0
Minority interests                 (17.3)              (18.9)               (14.5)
Earnings before income taxes       613.7               568.3                429.1
Corporate assets (a)               859.8               766.4                765.4

Total assets                    $8,415.6            $5,621.6             $5,563.3
</TABLE>
(a)   Corporate assets consist primarily of cash and
cash equivalents, marketable securities, investments
and advances, and other assets not directly
associated with the operations of a business
segment.

Operations by Geographic Area
In millions
<TABLE>
                                 United                        Other    Adjustments/
                                 States      Europe    International    Eliminations    Consolidated
For the year 1997

<S>                            <C>         <C>                <C>             <C>           <C>
Sales to customers             $4,619.4    $1,878.8           $605.1          $   --        $7,103.3
Transfers between geographic
  areas                           745.7        67.3             47.4          (860.4)             --
Total sales and transfers      $5,365.1     1,946.1            652.5          (860.4)       $7,103.3
Operating income from
  operations                   $  662.3        87.6             65.9            (6.7)       $  809.1
General corporate expenses
  charged to operating income                                                                  (48.8)
Operating income                                                                            $  760.3
Identifiable assets at
  December 31, 1997            $5,360.0     1,804.1            415.7           (24.0)       $7,555.8
Corporate assets                                                                               859.8
Total assets at
  December 31, 1997$8,415.6

For the year 1996

Sales to customers             $4,234.5     1,939.5            528.9              --        $6,702.9
Transfers between geographic
  areas                           689.0        49.8             43.5          (782.3)             --
Total sales and transfers      $4,923.5     1,989.3            572.4          (782.3)       $6,702.9
Operating income from
  operations                   $  578.0        92.9             55.1             1.3        $  727.3
General corporate expenses
  charged to operating income                                                                  (43.8)
Operating income                                                                            $  683.5
Identifiable assets at
  December 31, 1996            $3,262.1     1,286.6            323.8           (17.3)       $4,855.2
Corporate assets                                                                               766.4
Total assets at
  December 31, 1996                                                                         $5,621.6

For the year 1995

Sales to customers             $3,472.8     1,754.0            502.2              --        $5,729.0
Transfers between geographic
  areas                           568.5        60.9             42.5          (671.9)             --
Total sales and transfers      $4,041.3     1,814.9            544.7          (671.9)       $5,729.0
Operating income from
  operations                   $  391.5        97.5             51.7             0.5        $  541.2
General corporate expenses
  charged to operating income                                                                  (44.2)
Operating income                                                                            $  497.0
Identifiable assets at
  December 31, 1995            $3,183.9     1,305.3            319.8           (11.1)       $4,797.9
Corporate assets                                                                               765.4
Total assets at
  December 31, 1995                                                                         $5,563.3

International sales of U.S. manufactured products in millions were $1,246.3 in
1997, $1,191.9 in 1996 and $1,028.9 in 1995.
</TABLE>

NOTE 16 - PENSION PLANS:  The company has noncontributory pension
plans covering substantially all domestic employees.  In addition,
certain employees in other countries are covered by pension plans.
The company's domestic salaried plans principally provide benefits
based on a career average earnings formula.  The company's hourly
pension plans provide benefits under flat benefit formulas.
Foreign plans provide benefits based on earnings and years of
service.  Most of the foreign plans require employee contributions
based on the employee's earnings.  In addition, the company
maintains other supplemental benefit plans for officers and other
key employees.  The company's policy is to fund an amount which
could be in excess of the pension cost expensed, subject to the
limitations imposed by current statutes or tax regulations.
  The components of the company's pension cost for the years ended
December 31, include the following:

In millions                         1997        1996        1995
Benefits earned during the
  year                           $  39.7     $  38.7      $ 32.7
Interest cost on projected
  benefit obligation               123.1       113.5        99.7
Actual return on plan assets      (304.1)     (193.8)     (261.2)
Net amortization and deferral      158.7        65.9       157.7
  Net pension cost               $  17.4     $  24.3      $ 28.9

  The status of employee pension benefit plans at December 31, 1997 and 1996,
was as follows:
<TABLE>
                                              1997                          1996
                                    Overfunded    Underfunded     Overfunded  Underfunded
In millions                              plans          plans          plans        plans
Actuarial present value of
  projected benefit obligation,
  based on employment service to
  date and current salary levels:
  <S>                               <C>              <C>          <C>            <C>
  Vested employees                  $(1,573.8)       $(213.2)     $(1,194.1)     $(332.8)
  Nonvested employees                   (26.7)         (21.5)         (18.1)       (14.0)
  Accumulated benefit obligation     (1,600.5)        (234.7)      (1,212.2)      (346.8)
  Additional amount related to
    projected salary increases          (42.5)         (51.6)         (36.1)       (38.6)
Total projected benefit obligation   (1,643.0)        (286.3)      (1,248.3)      (385.4)
Funded assets at fair value           1,926.0          105.5        1,456.6        232.8
Assets in excess of (less than)
  projected benefit obligation          283.0         (180.8)         208.3       (152.6)
Unamortized net (asset) liability
  existing at date of adoption           (2.2)          15.0           (2.5)        17.2
Unrecognized prior service cost          35.5           11.9           35.6         12.8
Unrecognized net (gain) loss           (174.1)           3.4          (77.8)        23.9
Adjustment required to recognize
  minimum liability                        --           (2.4)             --       (14.6)
Prepaid (accrued) pension cost      $   142.2        $(152.9)     $   163.6      $(113.3)
</TABLE>
  Plan investment assets of domestic plans are balanced between
equity securities and cash equivalents or debt securities.  Assets
of foreign plans are invested principally in equity securities.
  The present value of benefit obligations for domestic plans at
December 31, 1997 and 1996, was determined by using an assumed
discount rate of 7.0% and 7.25%, respectively, an assumed rate of
increase in future compensation levels of 4.75%, and an expected
long-term rate of return on assets of 9.0%.  The weighted averages
of the actuarially assumed discount rate, long-term rate of return
on assets and the rate for compensation increases for foreign plans
were 8.0%, 8.75% and 5.5% in 1997, and 8.5%, 9.0% and 6.0% in 1996,
respectively.
  Most of the company's domestic employees are covered by savings
and other defined contribution plans.  Employer contributions and
costs are determined based on criteria specific to the individual
plans and amounted to approximately $28.3 million, $27.4 million
and $24.9 million in 1997, 1996 and 1995, respectively.
  The company's costs relating to foreign defined contribution
plans, insured plans and other foreign benefit plans were
$11.0 million, $8.2 million and $4.8 million in 1997, 1996 and
1995, respectively.
  The existing pension rules require the recognition of a liability
in the amount that the company's unfunded accumulated benefit
obligation exceeds the accrued pension cost, with an equal amount
recognized as an intangible asset.  As a result, the company
recorded a noncurrent liability of $2.4 million and $14.6 million
in 1997 and 1996, respectively.  Offsetting intangible assets were
recorded in the Consolidated Balance Sheets.

NOTE 17 - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS:  In addition
to providing pension benefits, the company sponsors several
postretirement plans that cover most domestic employees. These
plans provide for health care benefits and in some instances, life
insurance benefits.  Postretirement health plans are contributory
and are adjusted annually.  Life insurance plans are
noncontributory.  When full-time employees retire from the company
between age 55 and age 65, most are eligible to receive, at a cost
to the retiree, certain health care benefits identical to those
available to active employees.  After attaining age 65, an eligible
retiree's health care benefit coverage becomes coordinated with
Medicare.  The company funds the benefit costs principally on a pay-
as-you-go basis.
  Summary information on the company's plans at December 31, was as
follows:
In millions                                  1997           1996
Financial status of plans:
Accumulated postretirement benefits
   obligation (APBO):
   Retirees                               $(398.5)       $(436.4)
   Active employees                        (199.0)        (151.9)
                                           (597.5)        (588.3)
Plan assets at fair value                      --             --
Unfunded accumulated benefits
  obligation in excess of plan assets      (597.5)        (588.3)
Unrecognized net gain                       (62.0)         (42.3)
Unrecognized prior service benefits         (71.8)         (76.9)
Accrued postretirement benefits cost      $(731.3)       $(707.5)

  The components of net periodic postretirement benefits cost for
the years ended December 31, were as follows:

In millions                                1997     1996    1995
Service cost, benefits attributed to
  employee service during the year        $ 7.9    $ 6.4   $ 5.2
Interest cost on accumulated
  postretirement benefit obligation        38.3     40.6    37.6
Net amortization and deferral              (6.7)    (5.7)   (5.6)
Net periodic postretirement benefits cost $39.5    $41.3   $37.2

  The discount rate used in determining the APBO was 7.0% and 7.25%
at December 31, 1997 and 1996, respectively.  The assumed health
care cost trend rates used in measuring the accumulated
postretirement benefits obligation were 8.30% in 1997 and 9.35% in
1996, respectively, declining each year to an ultimate rate by 2003
of 4.50% and 4.75% in 1997 and 1996, respectively.
  Increasing the health care cost trend rate by 1.0% as of December
31, 1997, would increase the APBO by 8.0%.  The effect of this
change on the sum of the service cost and interest cost components
of net periodic postretirement benefits cost for 1997 would be an
increase of 8.0%.





Report of Management

     The accompanying consolidated financial statements have been
prepared by the company.  They conform with generally accepted
accounting principles and reflect judgments and estimates as to the
expected effects of incomplete transactions and events being
accounted for currently.  The company believes that the accounting
systems and related controls that it maintains are sufficient to
provide reasonable assurance that assets are safeguarded,
transactions are appropriately authorized and recorded, and the
financial records are reliable for preparing such financial
statements.  The concept of reasonable assurance is based on the
recognition that the cost of a system of internal accounting
controls must be related to the benefits derived.  The company
maintains an internal audit function that is responsible for
evaluating the adequacy and application of financial and operating
controls, and for testing compliance with company policies and
procedures.
     The Audit Committee of the board of directors is comprised
entirely of individuals who are not employees of the company.  This
committee meets periodically with the independent accountants, the
internal auditors and management to consider audit results and to
discuss significant internal accounting controls, auditing and
financial reporting matters.  The Audit Committee recommends the
selection of the independent accountants, who are then appointed by
the board of directors, subject to ratification by the shareholders.
     The independent accountants are engaged to perform an audit of
the consolidated financial statements in accordance with generally
accepted auditing standards.  Their report follows.

/S/ David W. Devonshire
David W. Devonshire
Senior Vice President and Chief Financial Officer



Report of Independent Accountants

                                               Price Waterhouse LLP
                                         4 Headquarters Plaza North
                                              Morristown, NJ  07962


February 3, 1998

To the Board of Directors and
Shareholders of Ingersoll-Rand Company:


     In our opinion, the accompanying consolidated balance sheet
and the related consolidated statements of income, of shareholders'
equity and of cash flows present fairly, in all material respects,
the financial position of Ingersoll-Rand Company and its
subsidiaries at December 31, 1997 and 1996, and the results of
their operations and their cash flows for each of the three years
in the period ended December 31, 1997, in conformity with generally
accepted accounting principles.  These financial statements are the
responsibility of the Company's management; our responsibility is
to express an opinion on these financial statements based on our
audits.  We conducted our audits of these statements in accordance
with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable
basis for the opinion expressed above.

/s/ Price Waterhouse LLP
Price Waterhouse LLP